Oil prices rise on escalating geopolitical tensions

Summary

Podcast Summary: Moving Markets – Oil prices rise on escalating geopolitical tensions

Date: July 23, 2026
Host: Jan Bob
Guests: Helen Frier (Market Expert), Mathieu Racheter (Earnings Analyst)

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Episode Overview

This episode centers on the sharp rise in oil prices amid rapidly escalating geopolitical tensions in the Middle East. Host Jan Bob and guest Helen Frier break down the market’s reaction, including movements in equities, bonds, and currencies, ahead of an awaited ECB policy decision. Later, Jan discusses the broader earnings season with analyst Mathieu Racheter, focusing on strong bank results and the outlook for US financials.

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Key Discussion Points & Insights

1. Geopolitics and Oil Market Turmoil

[00:02–02:39]

• Escalating hostilities in the Middle East, particularly between the US and Iran, have pushed Brent crude oil to around $96 per barrel—a six-week high.
  • Incident: "A tanker being hit by an unknown projectile off Saudi Arabia." — Helen Frier [01:05]
• Threats to major shipping lanes, especially the Strait of Hormuz and the Bab El Mandeb Strait, are causing significant supply concerns.
  • "Several tankers carrying Saudi crude actually reversed course… to avoid this area." — Helen Frier [01:54]
• Political Rhetoric:
  • President Trump announced that for every attack on a ship in the Strait of Hormuz, the US would destroy Iranian infrastructure, prompting retaliatory threats from Iran.
• Economic Risk:
  • World Bank’s chief economist warned of global growth potentially dropping to 1.3% in 2026 if escalation continues. [02:20]
  • "This could slash global growth to just 1.3% in 2026 and reignite inflationary pressures." — Helen Frier [02:22]

2. Bond Market Reactions

[02:39–03:10]

• US 10-year Treasury yields hit a two-month high, reflecting inflation and rate hike fears.
• German 2-year borrowing costs and French long-term yields also climbed to multi-year highs.
  • "French longer-dated yields exceeded 4% for the first time in over a decade." — Helen Frier [02:59]

3. Equities: US & Europe

[03:10–04:28]

• US Markets:
  • S&P 500 saw "modest losses," Nasdaq fell 0.6%, Dow Jones was flat. Investors are cautious pre-earnings.
  • Super Microcomputer stood out: "Shares jumped 21% after the server maker forecast surprisingly robust margins." — Helen Frier [03:44]
• Europe:
  • Stoxx 600 finished at a two-week high, mainly lifted by energy, defense stocks, and standout performer Randstad (+14%). [04:05]

4. Q2 Earnings: Tech Highlights

[04:28–05:25]

• Alphabet: Beat expectations both on revenue and profit, with Google Cloud revenue up 82%, yet shares dropped ~3% in after-hours trading.
• Tesla: Shares fell ~4% post-earnings amid disappointing profits squeezed by lower selling prices, reduced EV tax credits, and high R&D spending.
  • "Lower average selling prices, EV tax credits expiring, and higher costs… all squeezed profits." — Helen Frier [04:59]

5. Asia Markets & Currency Moves

[05:25–06:21]

• Strong session for Asian indices except India; Hang Seng up 1.2%, Kospi up 3.7%, Kosdaq up 5%.
• Japanese yen hit a 40-year low versus the dollar, with authorities hinting at possible intervention.
  • "Japan's Finance Minister indicated readiness to take decisive action if needed." — Helen Frier [06:00]

6. Preview: Upcoming Economic Events

[06:21–07:18]

• ECB: Expected to keep rates on hold, but market anticipates at least one more hike this year.
• Key data releases: US initial jobless claims, French business confidence, Eurozone consumer confidence.
• Anticipated earnings: Intel, SK Hynix, SAP.
• "US and European futures are currently in the red... investors looking at earnings, thinking about AI spending concerns as well as oil prices going up." — Helen Frier [07:16]

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Deep Dive: US Earnings Season Momentum

With Mathieu Racheter [07:22–10:50]

1. Strong Start to Q2 Earnings

[07:45–08:35]

• 88% of reporting S&P 500 firms beat earnings expectations—well above the historical average (68%) and best in 3+ years.
• Aggregate reported earnings were 19% above consensus; Q2 YoY growth at 23%.
  • "Overall it is an unusually strong opening to the earnings season." — Mathieu Racheter [08:30]

2. US Bank Results & Outlook

[08:35–09:47]

• Large US banks reported robust net interest income, aided by faster loan growth—especially from CAPEX and AI infrastructure.
• Investment banking remains a bright spot, with healthy deal pipelines and strong trading/fees.
• Credit quality is stable; negligible increase in charge-offs; private investment flows are recovering, helped by AI financing.
  • "No broad deterioration in the US consumer… private investment flows also recovered, supported by private credit infrastructure and also AI financing." — Mathieu Racheter [09:34]

3. Analyst's Bank Sector Positioning

[09:47–10:47]

• Constructive on US banks, especially those with strong investment banking divisions.
• Earnings upgrades likely; return on equity to improve.
• Shareholder returns (buybacks/dividends) remain attractive, notably at Citigroup.
  • "Improving earnings, resilient credit quality and no general signs of stress in the banking system… overall remain still constructive on US banks." — Mathieu Racheter [10:37]

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Notable Quotes & Memorable Moments

• "We saw Brent crude climb to levels we haven't seen for almost six weeks yesterday and this morning it's up again at around $96 a barrel." — Helen Frier [01:05]
• "President Trump saying he would destroy an Iranian bridge or power plant for every attack on a ship in the Strait of Hormuz… Iran warned that this would trigger a retaliatory response." — Helen Frier [01:58]
• "Super Microcomputer really stood out. ITS shares jumped 21% after the server maker forecast surprisingly robust margins for the upcoming quarter." — Helen Frier [03:44]
• "The beat rate: 88% reported earnings per share above expectations. That is actually the strongest results after the first week in more than three years." — Mathieu Racheter [07:55]
• "Credit quality remains resilient… card charge off guidance improved, which indicates no broad deterioration in the US consumer." — Mathieu Racheter [09:32]

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Timestamps for Key Segments

• Geopolitical Tensions & Oil Price Impact: 00:02–02:39
• Bond and Equity Market Moves: 02:39–04:28
• Tech & Key Earnings Reports: 04:28–05:25
• Asia & Currencies Update: 05:25–06:21
• Market Preview & ECB: 06:21–07:18
• Earnings Season Insights (with Mathieu Racheter): 07:22–10:50

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Tone & Language

• Analytical, cautious, and focused on actionable data for investors.
• Frequent use of data-driven statements and measured forecasts.
• Notably pragmatic when discussing risks related to geopolitics, growth, and corporate results.

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Summary

This episode underscores how renewed Middle East tensions are heightening oil price volatility and stoking inflation fears, with ripple effects across global markets. Despite these headwinds, corporate America—especially large banks—has delivered a notably strong start to the Q2 earnings season, suggesting resilience in both company fundamentals and consumer credit quality. The path forward hinges on evolving geopolitics, central bank decisions, and further earnings updates from heavyweight firms.

Transcript

[A]

Good morning from Julius Bear. Today is Thursday 23rd July. My name is Jan Bob and this is Julius Baer's Moving Markets podcast. The escalating and widening conflict have sent the oil price higher, reviving fears of inflation, taking short term yields to multi year highs. The European Central bank is due to announce its policy decision later in the day and some of the mega cap tech names have started reporting earnings. We'll be unpacking that and the rest of the latest market moves with Helen Frier in a minute. And then I'll be catching up with Mathieu Racheter to get his view on the ongoing earnings season. But now let's start with the latest market news. Good morning to you, Helen. Good morning, Jan. Now, Helen, I think we have to start with geopolitics again, which is clearly dominating the mood at the moment. We saw oil prices rise again yesterday. Can you talk us through what's been happening?

[B]

Absolutely, yes. So the situation in the Middle east is evolving rapidly. We saw Brent crude climb to levels we haven't seen for almost six weeks yesterday and this morning it's up again at around $96 a barrel after reports of a tanker being hit by an unknown projectile off Saudi Arabia. So these moves all fueled by escalating hostilities between the US And Iran and the threats to to shipping lanes by the Iran backed Houthi militia in Yemen, of course, leading to growing concerns around potential supply disruptions for oil.

[A]

Yeah, initially it was the Strait of Hormuz which is a crucial artery for global oil flows. But now we are seeing like a dual strait worry emerge with the Bab El Mandeb Strait becoming increasingly vulnerable as well.

[B]

Yes, and reports have indicated that several tankers carrying Saudi crude actually reversed course yesterday, yesterday and the day before to avoid this area. Things do seem to be escalating with President Trump saying he would destroy an Iranian bridge or power plant for every attack on a ship in the Strait of Hormuz. Then Iran warned that this would trigger a retaliatory response with them targeting regional oil and gas facilities. As for what this means for the economy, the World Bank's chief economist cautioned that a prolonged escalation of the conflict could slash global growth to just 1.3% in 2026 and reignite inflationary pressures.

[A]

That paints a pretty bleak picture how a bond market's reacting to all of this.

[B]

So benchmark 10 year US treasury yields climbed to a two month high yesterday, reflecting investor concerns about inflation potentially rising again and and the possibility of the Federal Reserve hiking rates and we also saw an impact in Europe where German two year borrowing costs hit a two year high yesterday and French longer dated yields exceeded 4% for the first time in over a decade.

[A]

Quite dramatic moves. Let's turn to equities now. How did US Markets perform yesterday? Amidst all the latest developments, the impact

[B]

on US stocks was relatively contained with the S&P 500 ending the day with modest losses. The Nasdaq fared a bit worse, closing down 0.6% and the Dow Jones was basically flat. Investors were cautiously awaiting some of the big tech earnings reports. And there was more news causing a bit more uncertainty with some fresh tariff threats from President Trump regarding pharmaceutical imports. In terms of single stocks though, Super Microcomputer really stood out. ITS shares jumped 21% after the server maker forecast surprisingly robust margins for the upcoming quarter.

[A]

Okay, what about earlier in European markets? I saw the Stoxx 600 finished at a two week high. What were the drivers here?

[B]

Yes, so European markets fared better as you say, jan. The Stoxx 600 gained 0.6% and this was driven by gains in energy and defense stocks. It's worth mentioning Randstad, the staffing company, boosted the index performance with its Stock rising nearly 14% after the company beat its growth quarterly revenue expectations.

[A]

You mentioned before that investors were keenly awaiting some earnings results. Right. We heard from Tesla and Alphabet after the market close yesterday. What did these companies Q2 results look like?

[B]

Yes, so these were the first of the magnificent seven firms to report earnings. Now Alphabet's results beat Wall street expectations on the top and bottom lines. The company's Google cloud revenue was up 82% which was comfortably above expectations. But despite all shares were down around 3% in extended trading. And Tesla's stock fell around 4% after hours after the electric vehicle maker's profit came in well short of what analysts were expecting. The company noted that lower average selling prices, EV tax credits expiring and higher costs because of the company's investments in AI and R& D projects all squeezed profits.

[A]

All right, and what about Asian markets this morning? What's happening there?

[B]

Asian markets are largely up so far today with the exception of Indian equities. They were trading just slightly in the red when I last looked. The best performers are the Hang seng up around 1.2% and South Korea's Kospi is up 3.7% and the Kosda almost 5%.

[A]

All right, let's look lastly at currencies. The Japanese yen has been making quite some headlines.

[B]

It has the Yen fell to a 40 year low against the dollar on Tuesday, prompting intervention talk from Japanese authorities. Although the currency did then find its footing a bit yesterday, Japan's Finance Minister indicated readiness to take decisive action if needed. And there's also speculation that the bank of Japan might accelerate its pace of interest rate hikes, which could provide some support for the currency.

[A]

All right, looking ahead then, it's the ECB meeting later today. What else do we have coming up that investors should be aware of?

[B]

Yes, there is plenty happening. So firstly, just a word on the ecb. It's expected to hold interest rates steady today, but markets are pricing in at least one hike before the end of the year. We'll also get some economic data releases today, including US initial jobless claims, French business confidence and Eurozone consumer confidence figures. And then on the earnings front, a lot of companies reporting, keep an eye out for results from intel, sk, Hynix and SAP, among others. And just quickly then to finish, US and European futures are currently in the red, I guess with investors looking at earnings, thinking about AI spending concerns as well as oil prices going up. So let's see what today brings. That's it from me. Back to you, Jane.

[A]

So another packed day ahead. Thank you very much, Helen. Great to speak to you today.

[B]

Thank you very much for having me.

[A]

And now, Matthew, good morning to you as well. Great to have you with us. Good morning, Jan. Now, Matthew, the earnings season is in full swing. We've just talked about the earnings reports of Alphabet and Tesla. Many more are coming up. The US earnings season in general has started with real momentum. Just how strong has the opening week been?

[C]

Yes, that's true. So it has been a very strong start. So after the first week, around 50 of the S&P 500 companies had reported representing around 20% of index earnings. And the headline number is the beat rate. So 88% reported earnings per share above expectations. That is actually the strongest results after the first week in more than three years and 20 percentage points above the historical average of 68%. And also the size of the Beats was also quite impressive. So in aggregate, reported earnings came in 19% above consensus. As a result of that, the blended estimate for second quarter earnings has risen by 1% since the start of July, bringing year over year growth to 23%. So overall it is an unusually strong opening to the earnings season. Of course, it is still early in this earnings season, but the first signal is clearly encouraging.

[A]

Very good. And when we zoom in on banks, what are their results telling us about the current environment?

[C]

So the message from the large US banks is broadly positive. Net interest income was stronger than expected across several large banks, helped by faster loan growth, especially commercial lending linked to capital expenditure and AI infrastructure. Also, margins were broadly stable and despite slightly greater competition for deposits and the sector's outlook for net interest income growth in 2026 was either raised or confirmed then investment banking was another bright spot. So equity trading and underwriting fees were strong and the deal PIP pipelines remain healthy going into the third quarter. On costs, some banks expect further efficiency gains while others continue to invest in technology and stuff. Then also credit quality also remains resilient, so charge off rates were stable from the previous quarter, reserve additions were low and card charge off guidance improved, which indicates no broad deterioration in the US consumer. There are some issues in private credit, but no signs of wider stress. So private investment flows also recovered, supported by private credit infrastructure and also AI financing.

[A]

All right. Now, given all those signals that you've just talked about, Matio, are you still constructive on US banks?

[C]

So yes, I remain constructive. So loan growth is improving, net interest income is holding up, capital markets, revenues are recovering and credit costs remain under control. And that combination should support further upgrades to consensus earnings estimates, with a preference for banks that have greater investment banking exposure. We also expect returns on equity to improve, with for example Citigroup Group showing the strongest momentum. And then also shareholder returns remain attractive. Buybacks and dividends are in the mid to high single digit range relative to the market capitalization, with Citigroup expected at the upper end. Some banks are now closer to their target capital levels, which limits the scope for more buybacks. But the broader picture remains constructive. So improving earnings, resilient credit quality and no general signs of stress in the banking system. So overall remain still constructive on US banks.

[A]

Sounds good. Thank you very much Mathieu for sharing your view on this.

[C]

Thank you Jan. It's always a pleasure.

[A]

And that is all for today. A big thank you to Helen and Matthieu for sharing their views and thank you all for tuning in. If you enjoy today's show, don't forget to subscribe if you haven't already. And please also leave us a review on whichever platform you like to listen on. And do join us again tomorrow when Helen will be back, but this time as your host and with more of my colleagues to talk about what is moving markets. Until then, I wish you all a great day. Bye for now.

[B]

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