Fin-X Weekly 27th July 2026

The renewed Middle East conflict pushed oil prices sharply higher and drove a rotation across equity markets, as AI developments weighed on technology names.

The United States unveiled a broad new global tariff regime and threatened steep additional duties on Canada.

Major central banks moved towards a synchronised pause, with markets pricing little prospect of near-term change.

Global business activity accelerated for a second month, though US price pressures re-emerged.

Australian employment surprised to the upside albeit with some weakness in the details.

The week ahead brings Australian inflation, several central bank meetings, US and European GDP, Chinese PMIs and a large volume of earnings reports.

Global markets were shaped last week by several overlapping macroeconomic themes. Renewed tensions in the Middle East pushed oil prices back to US$100 per barrel, while central banks moved towards an increasingly synchronised pause in policy rates. The United States announced a fresh series of tariffs to supersede the temporary 10% levies that had followed the Supreme Court’s decision to block last year’s “Liberation Day” measures. Growth signals from the flash PMI readings continued to diverge, and equity investors spent the week digesting the latest earnings and developments in artificial intelligence.

Oil prices rose after Iran’s Houthi allies said they had attacked two Saudi oil tankers in the Red Sea, widening the conflict beyond the Persian Gulf and threatening to interrupt a broader range of shipping traffic. Saudi Arabia had previously diverted millions of barrels of oil per day to an export terminal on the Red Sea in response to Iran’s attacks on tankers in the Strait of Hormuz. The Houthis declared a maritime embargo against Saudi Arabia, and President Donald Trump said the United States would hold Iran responsible for any future Houthi attacks on ships.

Secretary of State Marco Rubio said Iran did not appear serious about reaching a deal to end the fighting. The United States continued its air strikes through the week and sent additional troops to the region, prompting speculation that a ground invasion was imminent. Air strikes appear to have been suspended over the weekend, however, to allow talks to resume.

The Americans also moved to allow Saudi Arabia to enrich uranium domestically — a step likely to inflame the Iranian leadership and one that appears to run contrary to global nuclear proliferation agreements.

In the United Kingdom, former mayor of Manchester Andy Burnham became Britain’s seventh prime minister in a decade. President Trump welcomed Burnham’s plan to fast-track oil and gas exploration in the North Sea. “We will make this moment a circuit breaker for Britain,” Burnham said in his first speech as premier on Monday.

President Trump imposed a broad tariff regime on countries around the world, including Australia and the European Union. The 10% to 12.5% duties effectively replaced his expiring 10% global tariffs on Friday. The new measures rest on tenuous claims that the countries concerned are not doing enough to prevent imports made using forced labour.

The administration also threatened Canada with new 50% tariffs, citing three specific grievances: provincial boycotts by eight Canadian provinces banning US alcohol products, Canada granting the European Union better dairy market access than the United States, and Canadian caps on US vehicle exports from reshoring automakers. The move appears aimed at undermining Canada’s position as Washington maintains pressure to renegotiate the terms of the CUSMA trade deal.

Growth across the United States, the eurozone, Japan and the United Kingdom accelerated for a second straight month in July, reaching its fastest pace since last November and moving above the three-year average — a clear bounce from the lows caused by the Middle East war between March and June.

Two temporary tailwinds stood out: hospitality and leisure spending tied to the FIFA World Cup and hot weather, and continued precautionary stock-building by manufacturers, though the latter is reportedly fading, especially in the United States.

Input and selling price inflation accelerated in the United States to its highest level since August 2022, while cost pressures eased in Europe. The report’s key warning was that “the renewed escalation of hostilities in the Middle East threatens to reverse July’s improvements in demand, supply chains and inflation pressures”.

The European Central Bank’s Governing Council left all three key policy rates unchanged at its July meeting, following a +0.25% hike in June, and reiterated its commitment to ensuring that inflation stabilises at 2% over the medium term.

Market prices indicate only a 40% chance of a Federal Reserve rate hike this week, with an increase all but certain in September. The British and Japanese central banks are also expected to keep their monetary policy settings unchanged.

In Australia, the PMIs indicated that business confidence ticked up from a more than two-and-a-half-year low but remained subdued by historical standards. “July data indicated a fresh injection of new work across the Australian private sector, ending a four-month run of decline that was the longest since the start of 2024,” S&P Global said, with new orders driven by domestic demand while export orders stayed soft.

The pick-up in employment was reflected in the ABS June jobs report, which recorded +76.3k new jobs, far more than anticipated. The unemployment rate nonetheless held steady at 4.4% after a +0.3% jump in the participation rate. Underemployment also rose, suggesting a low signal-to-noise ratio in the headline figures and that investors should be cautious before extrapolating the strength.

This week’s quarterly CPI numbers are likely to carry far greater weight for the next RBA decision in early August. The headline rate is expected to remain at +4.0% yoy, while the core trimmed mean measure is expected to tick up to +3.7% yoy.

Macquarie Group reported “satisfactory” trading conditions for the three months ending June 2026, with Commodities and Global Markets profit substantially higher than the prior year, driven by stronger North American gas and power trading. The update also confirmed the upcoming retirement of chief executive Shemara Wikramanayake and her departure from the board on 6th November.

Both Tesla and Alphabet signalled higher spending as they invest in artificial intelligence. Alphabet’s “other income”, which includes stakes in Anthropic and SpaceX, added an enormous US$99 billion. Cloud revenue jumped +82% yoy in the second quarter while capital expenditure doubled from a year earlier to US$44.9 billion. The company raised its expected 2026 capex to as high as US$205 billion, worrying some investors, and its share price slipped -7.8% over the week.

Tesla shares fell -17.8% despite record quarterly revenue of US$28.24 billion, up +26% yoy, driven by best-ever second-quarter deliveries of 480,126 vehicles. The company also announced a +142% annual increase in capital expenditure tied to AI infrastructure, its Cybercab and Optimus robot production, pushing free cash flow to a negative US$1.1 billion.

Source: Bloomberg ANR

OpenAI drew attention as its latest frontier model broke out of a testing sandbox and attacked servers at Hugging Face. The safety guardrails that normally limit high-risk cyber activity had been deliberately disabled to measure the model’s raw offensive capability, leaving containment as the only safeguard — and it failed, in what OpenAI called an “unprecedented” state-of-the-art cyber incident.

The episode has intensified concerns among AI-safety researchers about loss-of-control risks from autonomous agentic systems, with commentators framing it as a “lab leak”-style event given that no human was directing the model’s actions.

Looking to the week ahead, 175 S&P 500 companies are due to report, including Microsoft, Qualcomm, Meta, Apple and Amazon.

The economic data calendar is also a little heavier. Besides the Australian inflation numbers and the central bank meetings, the United States and several European countries will report second-quarter GDP, and the Chinese official PMIs are due on Friday.

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