A wave of relief swept investors this week, as easing tensions between the US and Iran pushed oil prices lower and improved confidence, helping markets regain momentum.
Read this article to understand:
- How geopolitics impacted oil prices
- The concentration in equity performance
- What central bank moves mean for markets
The week began with a decisive change in tone as investors absorbed confirmation of a US-Iran framework agreement that promised to end the conflict and reopened the Strait of Hormuz. After months of tension, the removal of this risk landed with real force. Oil reacted immediately, with Brent prices falling towards $80 a barrel as the week progressed, their lowest level since the beginning of March.
That shift set the direction for the week. With energy-price pressures easing, investors could look beyond the inflation shock that had dominated recent weeks. Equity markets rallied broadly. Europe led the charge, reflecting its greater exposure to energy costs, while in Asia major indices surged by around five per cent in a single session. In the US, the S&P 500 pushed back towards record territory as sentiment improved and risk appetite returned.
The momentum from Monday’s news carried forward into the week
The momentum from Monday’s news carried forward into the week as the drop in oil prices helped stabilise the macroeconomic outlook, and equities extended their gains. The tech-heavy Nasdaq rose strongly, supported by continued demand for technology and semiconductor companies at the centre of the artificial intelligence (AI) story. For a moment, the narrative felt cleaner. Geopolitics had faded, growth expectations were stabilising, and markets were moving forward again.
However, the strength was not broad based. Equity leadership is becoming increasingly concentrated, and that brings volatility. Semiconductor stocks, after a powerful rally, began to swing sharply, with large moves in both directions. This shows how dependent market returns have become on a relatively small group of companies.
That was visible later in the week. Semiconductor company Intel rallied strongly on renewed optimism around domestic chip production and continued investment in the sector following a social media post from President Trump. At the same time, the other side of the AI trade came into sharper focus. Consultancy group Accenture sold off after weaker guidance, with investors questioning how AI might disrupt parts of its business. The contrast is striking; Accenture’s stock has fallen by over 30 per cent since the beginning of June. The same theme driving gains at the top of the market is starting to reshape, and in some cases undermine, other stocks.1
The more meaningful shift came from central banks. The US Federal Reserve, under new Chair Kevin Warsh, delivered its first clear signal. Rates were left unchanged, but the tone hardened. The focus was firmly on maintaining pressure on inflation, even as conditions improved. Markets reacted quickly. Expectations for further rate increases rose, and shorter-term bond yields jumped, marking one of the most significant moves in over a year. The news briefly interrupted market optimism. Equity markets pulled back as investors reassessed the outlook.
This was a week where investors exhaled, then paused
UK politics also edged into the picture by the end of the week, with confirmation on Friday that Andy Burnham had secured a decisive win in the Makerfield by-election, returning him to Parliament and strengthening his position to challenge Sir Keir Starmer for Labour leadership – and potentially the post of prime minister. Investors have taken this in their stride so far, but a leadership contest adds uncertainty around UK fiscal policy.
Looking back, this was a week where investors exhaled, then paused. The easing of geopolitical risk and the sharp fall in oil prices created a clearer backdrop and reopened the growth story, but the response from central banks was a reminder that policy will not quickly follow. Investors still have to navigate a narrow path between improving conditions and continued uncertainty.2
Past performance is not a reliable indicator of future results.
References
- The companies mentioned are for illustrative purposes only and do not constitute an investment recommendation.
- Source of all the data for this article: Aviva Investors and Bloomberg. Data as of 19 June 2026.
