Matt Britzman, senior equity analyst, Hargreaves Lansdown: “Global equity markets are trying to edge higher this morning, but the mood is far from euphoric, with the ongoing stalemate in the Middle East continuing to drag on risk appetite. Investors are also watching President Trump’s meetings with China closely, with any signs of progress on trade likely to set the tone for the next leg in market sentiment. For now, markets look cautiously constructive, but there is still plenty of geopolitical noise threatening to knock confidence off course.
The oil shock is starting to show up in corporate results, even if it is being drowned out in the US by the strength of the AI narrative. In the UK and Europe, banks have been taking larger provisions, airlines like Tui are holding up but cautious enough to suspend revenue guidance, and housebuilders such as Vistry are pointing to uncertain demand. Higher energy costs rarely stay contained in commodity markets for long. They filter through to consumer confidence, corporate margins, and lending conditions, making the next few reporting seasons a key test of how resilient earnings really are.
UK government bonds had a bruising session yesterday, with no real let-up this morning, as borrowing costs pushed back to levels not seen since the financial crisis. The 10-year yield is just shy of 5.1%, while the 30-year yield is still above 5.7% in early trading, as a cocktail of political uncertainty, rising oil prices, and renewed inflation concerns has landed at once. The worry is that pressure on Prime Minister Keir Starmer could eventually lead to looser fiscal policy, while higher energy costs are feeding expectations that the Bank of England may have to raise interest rates this year. It’s a tough mix: higher borrowing costs, weaker confidence and less room for the government to offer support if the economy slows.
Copper’s surge to fresh all-time highs is a timely reminder that the AI story is not just about chips and software. Futures climbed this morning, helped by stronger Chinese demand and mounting supply concerns, with resilient industrial activity, power grid investment, renewables and data centre growth all pulling in the same direction. For investors, that gives the rally a broader read-across, especially for mining stocks that have spent the past couple of years leaning into copper as the next major growth commodity. The question now is whether supply can keep up, because if demand from China, electrification and AI infrastructure continue to build, copper could remain one of the clearest ways for miners to prove they have growth beyond the old iron ore cycle.
Oil prices have cooled a touch, with Brent slipping back below $107 per barrel and snapping a three-day rally, but the broader picture is still one of tight supply and elevated geopolitical risk. The Strait of Hormuz remains heavily restricted, keeping a major artery for crude, gas and fuel flows under pressure, while efforts to end the US-Iran conflict have yet to gain real traction. For investors, the pullback looks more like a pause than a clear change in direction.”
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