Market Summary - Week Ahead
By Kathleen Brooks, Research Director UK
Date: 13 July 2026
Overview
The financial markets are experiencing a shaky start to the week, primarily influenced by rising oil prices and geopolitical tensions between the US and Iran. Brent crude oil has surged nearly 4%, trading above $79 per barrel, following recent attacks and claims from Iran regarding the closure of the Strait of Hormuz.
Oil Price Outlook
This week will be critical in determining whether the ongoing skirmishes can be absorbed by the markets without significant damage. Although oil prices remain below $80, the sentiment is cautious, with expectations that the situation will not escalate into a full-scale war.
Asian Market Volatility
Asian stocks faced sharp declines, with the South Korean Kospi index plummeting 9% after SK Hynix's stock fell 15%. Despite this volatility, analysts suggest that the sell-off may be temporary due to strong structural demand for chips and memory, particularly as earnings season approaches.
US Market Performance
US futures indicate a lower opening, particularly for the Nasdaq, which is expected to decline over 1%. The rise in geopolitical tensions and oil prices is disrupting the momentum trade, particularly affecting tech stocks and chip manufacturers.
Geopolitical Risks and Market Sentiment
Geopolitical risks disproportionately impact chip and tech stocks due to their popularity among retail investors, especially in Asia. Increased risk aversion leads to a sell-off in these sectors, despite their relative insulation from geopolitical chaos.
Economic Outlook
Despite the volatility, US economic data remains supportive, with resilient service sector activity and a solid labor market. In Europe, Germany's manufacturing sector shows signs of recovery, while China's CPI is lower than expected.
UK Political Landscape
In the UK, Andy Burnham is set to become the Labour Party leader, facing challenges related to rising oil prices and UK debt costs. The bond yields have risen, indicating sensitivity to oil prices, which could impact Burnham's fiscal plans.
Upcoming Events
This week, key events include Kevin Warsh's testimony to Congress regarding monetary policy and the release of the US CPI report. Analysts expect a slight decline in the headline CPI, influenced by falling gas prices, but geopolitical tensions may overshadow this data.
Earnings Season
The earnings season is underway, with major US banks like JP Morgan and Goldman Sachs set to report. Investors will be keenly watching metrics such as net interest income and consumer strength.