June Update - Iran and AI

Overview

Recent weeks have seen significant developments in the Middle East, culminating in a ceasefire agreement between the United States and Iran and the reopening of the Strait of Hormuz, one of the world's most important oil shipping routes. As a result, oil prices have fallen sharply from their recent highs as markets have become more confident that global energy supplies will continue to flow normally. Recent reports suggest oil prices have now fallen back to their lowest levels since the conflict began.

Whenever geopolitical events dominate the headlines, it is natural for investors to question whether they should be making changes to their portfolios. However, history has repeatedly shown that whilst markets can react sharply in the short term, they tend to recover and refocus on the underlying fundamentals of economic growth and company profitability over time.

The recent fall in oil prices is a good example of this. Earlier in the year, concerns over potential disruption to global energy supplies pushed prices higher and contributed to market volatility. As tensions have eased and shipping routes have reopened, those fears have reduced and energy prices have fallen back.

Looking ahead, the key question is whether oil prices continue to fall. Whilst nobody can predict this with certainty, the current ceasefire agreement and the prospect of additional Iranian oil returning to global markets should help ease some of the supply pressures that have driven prices higher this year. That said, geopolitical risks remain and markets are likely to remain sensitive to developments in the region.

Away from the Middle East, the other major theme influencing markets continues to be Artificial Intelligence. Significant investment into AI infrastructure is supporting economic growth and corporate earnings, particularly within the technology sector, although expectations remain high and periods of volatility should be expected.

Our view remains unchanged. Successful investing is not about predicting the next geopolitical event or reacting to every headline. Instead, it is about maintaining a well-diversified portfolio that is aligned with your long-term objectives and risk profile.