# A loud week the markets shrugged off _Missiles flew over the Gulf and frontier AI models multiplied, yet oil slipped and markets barely flinched_ Neil Woodford · 10 July 2026 · 5 min read ![Trump holding a small USA sign](https://cdn.sanity.io/images/v3acfbvo/production/f7f1d2f5691f8d6c655276f6c15b1662474d53a4-3500x2333.jpg?w=1600&fit=max&auto=format) --- Although in some ways it has been a quiet week, in others it has once again been uncomfortably tumultuous. _[Watch: On the show this week: London Isn't Dying — It's On Sale. Here's Where To Look — London Isn't Dying — It's On Sale. Here's Where To Look](https://www.noisecancelling.co/the-show)_ ## Iran Conflict Following repeated strikes on shipping traversing the Strait of Hormuz, especially on vessels that were travelling close to the Omani coast, the US has retaliated by bombing Iranian targets on the last two nights. The strikes have been concentrated along Iran’s south coast and intensified on the second night. Iran has retaliated by firing drones and missiles at US bases in Bahrain, Kuwait and Qatar. _[Embedded media](https://www.aljazeera.com/news/liveblog/2026/7/10/iran-war-live-fresh-attacks-on-iran-as-us-says-talks-still-on)_ These attacks coincided with the NATO conference in Ankara, which appeared to go much better than many had feared, but at which President Trump, in familiar fashion, vented his frustration with the Iranian leadership and its apparent duplicity. Although the conflagration and the rhetoric might suggest that the temporary peace is over and that we are returning to a full-blooded conflict, expert opinions, and indeed oil prices, suggest something less severe. Brent crude, when I last checked, at just under $76 a barrel, was below where it was when the peace deal was announced a few weeks ago, and regional experts seem to believe that the hostilities were triggered by the outpouring associated with the four-day-long funeral of Iran’s late Supreme Leader, Ayatollah Khamenei, who was buried this week. The MoU, which both sides signed, also appears still to be intact despite these events. It will be interesting to see if the hostilities continue for a third day, but my hope and expectation is that the last two days have allowed both sides to “vent their spleens” and that a return to the status quo will be seen as the best option. Nevertheless, it is clear that lasting peace in this conflict will not be easily won, and it may take months of discussions to reach some kind of long-term resolution. _(Neil in the margin: Memorandum of Understanding — a signed statement of intent rather than a binding treaty. That it survived the strikes matters, though the 'non-binding' bit is exactly why it can be venting-proof.)_ Importantly, in the meantime, the world is adjusting to the conflict and its impact on energy. New pipelines that bypass the Strait are being constructed, some shipping is leaving the Gulf, and oil production is increasing everywhere, not just in the UAE. My guess is that the period of maximum global energy market vulnerability to the closure of the Strait of Hormuz is now in the past, albeit that the energy industry has only had a few months to adjust to the conflict and its implications. Aside from these events, it has been a pretty uneventful week. The NATO summit in Turkey did not lead to any new bust-ups and indeed resulted in more assistance for Ukraine, which will not have pleased Russia’s leadership. In summary, NATO itself may well be a weaker alliance, but it appears that Trump’s aim of getting Europe to step up and pay for its own defence appears to be working, which might explain why he described the meeting as a “tremendously successful summit”. _(Neil in the margin: The long-running row over NATO members hitting the 2% of GDP spending target. Trump's pressure on European free-riding predates his second term by years.)_ ## Financial Markets This week, financial markets have been largely focused on oil prices and renewed military conflict in the Persian Gulf. Bond yields, not unexpectedly, have risen and equity markets have corrected a little, but there is no panic given what I have said already about the impact of the last two days. Aside from the index, there have been some interesting developments. SK Hynix’s US share offering (ADR) is going very well and was apparently 7x oversubscribed despite being the second-largest offering in US market history (at $28bn). _(Neil in the margin: American Depositary Receipt — a certificate letting a foreign firm's shares (here Korea's SK Hynix) trade on US exchanges in dollars without a direct US listing. '7x oversubscribed' means demand ran to seven times the stock on offer.)_ Interestingly, in the week when investors were getting very excited about SK Hynix, SpaceX, which was the largest IPO in US history, fell below its $150 IPO price, not by much, but given the intra-day high was over $225, arguably quite significant. ## AI Charges Ahead There has been quite a lot of activity in the AI space too, with the launch of a number of high-performing frontier models this week. Last week, Anthropic’s Fable and Mythos were re-released (the latter with a number of restrictions on who can use it) but hot on its heels were OpenAI’s new GPT-5.6 (Sol, Terra and Luna a.k.a. large, medium, small), launched today and Grok 4.5, which has surprised a lot of experts by being competitive with these two leading examples and which was made possible by SpaceX’s acquisition of Cursor earlier in the year. Meta has also joined the frontier club with Spark 1.1. _[Embedded media](https://openai.com/index/gpt-5-6/)_ In other words, the marketplace for frontier models is highly competitive, and this latest launch may well force Anthropic to reprice its Fable model downward. Quite where all this goes is not yet clear. The leading model developers are engaged in an incredible battle for supremacy in terms of performance and market penetration, but who will win and how is something that may not emerge for years and what the economics will look like is also totally opaque. Some things are possible to call, according to the experts who follow this industry though. The battle at the cutting edge has narrowed to four leading, well-financed players: OpenAI, Anthropic, Grok (SpaceX), and Alphabet (Gemini), with Meta playing catch-up, at least in the short term. ![Combined hyperscaler capex, CY2021–27E](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chart-hyperscaler-capex-cy2027-29d778e57cf3-light.png) What all this means for the scale of infrastructure build-out is also hard to call, but my guess is that the more aggressive numbers are beginning to look somewhat overambitious. ## What to look out for next week All eyes will, of course, be on events in the Persian Gulf and the impact the potential re-closing of the Strait of Hormuz may have on global energy prices. Whilst any calls right now could look spectacularly wrong in a matter of hours, mine is that the latest conflagration will not last and that a nervous peace will resume for the time being. If correct, this will once again ease tension in financial and commodity markets in now familiar ways. As for macro data, there are important US labour market numbers and inflation data. Don’t expect any running commentary from these releases from the Fed governor, however. In the UK, the most important data are May’s GDP numbers on Thursday, which are expected to show the effects of raised energy prices on the economy. The three-month number to May will also make for interesting reading, but is expected to show the economy slowing from the 0.6% expansion in Q1. _(Neil in the margin: A dry aside — the Federal Reserve observes a 'blackout' period before rate-setting meetings during which officials stay silent on policy, so no live reaction to the jobs and inflation prints.)_ _(Neil in the margin: That's quarter-on-quarter UK GDP growth; the three-month rolling figure smooths monthly noise. Note the caveat that raised energy prices are expected to drag May, so a slowdown here is partly a base effect.)_ The corporate calendar will be quiet ahead of the Q2 releases on both sides of the Atlantic, which will come thick and fast quite soon.