This Week in Review | Oil Prices, UK Politics, Tech Stocks

Transcript

Hello and welcome to This Week in Review.

This weekly segment is designed to highlight a few important developments you may have missed this week, what they may mean for markets, and most importantly, the potential impact for investors. To stay up to date with our latest market insights, subscribe to our YouTube channel or visit FisherInvestments.com. Now let's review what happened this week.

First, oil prices.

This week's prices for Brent crude, the international benchmark for crude oil, fell from the low 80s to around $73 per barrel. By Wednesday, prices were back around levels seen before the start of the war in Iran. We saw prices increase momentarily on Thursday as tensions rose, but prices fell back to around $72 per barrel this morning. With the agreement between the US and Iran appearing fragile, anything can happen. But as we discussed in a recent MarketMinder article, it's increasingly clear that markets are moving on. Since hitting a wartime high in April oil prices have been falling. Capital markets have responded accordingly, bottoming out at the end of March and bouncing back by mid-April. While we've seen renewed market volatility this week, we believe that it is unrelated to the situation in the Middle East. To us, this is a powerful reminder that markets move first, and they tend to recover from geopolitical shocks faster than expected, even while the human cost of war still weighs heavy. Negative headlines and dour sentiment may linger in the months ahead, especially as gas prices take time to fall. But, we expect the current trends to continue. Looking ahead to 2027, Brent crude futures contracts are fixed around the $70 range. That speaks to the diminishing importance of the Strait of Hormuz and gives us plenty of reason to stay bullish.

Next, UK Politics.

On Monday, UK Prime Minister and Labour Party leader Keir Starmer announced his resignation. He'll remain in the post until a successor is chosen, with the former mayor of Manchester, Andy Burnham, widely expected to become the UK's sixth prime minister in seven years, along with a new Labour Party leader. The nomination process officially begins in July and Burnham is widely expected to win uncontested. His main rival has already announced that he won't run. If no other challengers emerge, Burnham will likely walk into Downing Street within the next few weeks. So, what does this mean for the UK and global markets? There's no question this leadership transition adds near-term political uncertainty. However, Prime Minister Starmer's vulnerability and the change brewing behind it have been widely known for months. That reduces its surprise power for markets. Indeed, UK stocks and gilts barely moved after his resignation announcement, signaling that the coming uncertainty was largely priced in. And with political turnover becoming the UK's new normal, its power to negatively surprise markets has likely been blunted over the past decade. No matter how the next few weeks play out, it's worth remembering that markets are politically agnostic. As a new prime minister settles in and the uncertainty fades, we believe UK stocks will carry on just fine, along a continued global bull market.

Finally, tech stocks.

This week saw a pullback in tech stocks. So, what's behind it? While it's impossible to know for certain what is causing short term volatility, many have blamed investor concerns about bloated valuations and heavy artificial intelligence spending. After months of strong AI-driven gains, the rally turned into a slide on fears that even soaring profits won't keep pace with the billions required to build out data centers. And with the pressure on AI leaders to lower prices, the headwinds to growth seem real. Now, there's plenty to feel encouraged about. The economy remains strong, and the recent easing in oil prices takes pressure off, too. But this pullback highlights the fact that markets move on the gap between expectations and reality. High expectations for tech firms leave little opportunity for positive surprises. As tech sentiment cools and investors recalibrate their expectations, you create room for markets to continue up the proverbial wall of worry that stocks love to climb. Ultimately, we caution against overthinking short term volatility. Weekly or even daily swings are simply part of stocks' long-term growth. Stay focused on where the market is headed, not on any single bumpy week or month along the way.

That's it for this week.

Thanks for tuning in to This Week in Review. If you're looking for more insights, then don't miss our other series Three Things You Need to Know This Week, released every Monday. You can also visit FisherInvestments.com any time for our latest thoughts on markets. Thanks again for joining us, and don't forget to hit Like and Subscribe.