# Oil at $100, shoppers undeterred _Missiles in the Red Sea, missed numbers from the Mag7 and a maxed-out credit card in Downing Street – yet the week's most telling data were a blowout UK retail sales number and a stock market busy buying itself._ Neil Woodford · 24 July 2026 · 6 min read ![Shoppers in Oxford, UK](https://cdn.sanity.io/images/v3acfbvo/production/7ba9439929cf5dee2730047b40083dbacce8cdf3-2336x3504.jpg?w=1600&fit=max&auto=format) --- As predicted, this has been a very busy week of war news, macro data and results. ## The Gulf conflict _[Embedded media](https://www.bloomberg.com/news/articles/2026-07-23/how-houthis-red-sea-attacks-worsen-oil-shock)_ First to the Gulf conflict, where the comparatively limited exchange of fire between the US and Iran has continued. Most importantly, the oil price has reacted again to the extended conflict and is now hovering around $100 a barrel, which it last breached back in May. Perhaps the single most important new factor spooking the market is the threats and the attacks by the Iranian proxy Houthi militia on shipping in the Red Sea. The obvious concern here is that the threats to shipping navigating the narrow Bab al-Mandab strait will effectively close this route for Saudi oil exports to Asia. _(Neil in the margin: The narrow strait between Yemen and the Horn of Africa linking the Red Sea to the Gulf of Aden – the gateway for Suez traffic and roughly 12% of seaborne oil. Close it, and Saudi crude bound for Asia has to go the long way round.)_ This is a significant new and worrying development and must be a factor helping to catalyse renewed efforts to get the sides around a negotiating table. Indeed, this week it has been reported that representatives from Qatar and Pakistan, amongst others, have presented new proposals to the Iranian negotiators, which are apparently being considered. These latest developments are clearly worrying and are sufficiently serious, I think, to motivate all sides and intermediaries to renew efforts to bring about a lasting peace. I believe this is what is going on in the background, and I hope and indeed expect that these talks will bring this latest round of the conflict to a close. ## New Cabinet, old constraints The political news in the UK has kept the media very busy this week, with detailed analysis of the new members of the Cabinet, their capabilities and shortcomings, and a whole load of speculation about what is going to happen. So far, apart from the appointments and the sackings (deckchairs on the Titanic?), there have been a couple of eye-catching announcements which on the whole I welcome. First, although Burnham failed to announce a root-and-branch tearing up of the government's energy policy, he has allowed new drilling to take place in some parts of the North Sea (Jackdaw and Rosebank). This is an encouraging development but something which definitely falls into the necessary but not sufficient bucket. The new PM has also announced the scrapping of VAT on electricity bills and a cut to the maximum bus fare (from £3 to £2), which Ms Reeves increased from £2 to £3 in her October 2024 Budget. There have also been cuts to business rates for the leisure industry. All are welcome, but none is yet funded, so there will be some work to do here to provide the financial headroom for these initiatives. I suspect that the revenue-raising bits will be announced in the Budget, which is probably scheduled for late October or early November. Given Burnham's predecessor has already maxed out the credit card and announced further increases in tax (largely through frozen allowances), there will be very little room for manoeuvre for the incoming PM and his new Chancellor. I suspect we will see measures to align CGT with income tax rates, and some other tax raids on more affluent groups in society, but I am equally sure that the OBR will be telling them both that not much can be raised via these measures. Once again, the hard reality of a government that cannot control its spending will crash into a new PM's wish list. _(Neil in the margin: Capital gains tax, currently levied at rates below income tax. Aligning the two is a perennial Treasury temptation, though gains realisations tend to dry up when rates rise, which is why the take rarely matches the hopes.)_ _(Neil in the margin: The Office for Budget Responsibility – the independent fiscal watchdog that scores the government's tax and spending plans and, crucially, decides how much a given tax change is actually assumed to raise.)_ ## Late news: the British shopper returns Late breaking – despite all the gloom and the frequent exchange of fire between Iran and the US, UK retail sales in June were significantly better than expected. Sales including auto fuel were up 4.2%, double the expected growth of 2.4%, whilst sales excluding fuel rose 5.4% against an expected 3.2%. British consumers appear to be re-acquiring the inclination to spend rather than save. This is very encouraging and supports what I said on the podcast this week. _[Embedded media](https://www.ons.gov.uk/businessindustryandtrade/retailindustry/bulletins/retailsales/june2026)_ _[Watch: Neil sets out why UK interest rates are heading below 3% in the latest episode of the Noise Cancelling show — UK Interest Rates Are Heading Below 3% — And the New Prime Minister Can't Stop It](https://www.noisecancelling.co/the-show)_ ## US results season A couple of other things have caught my eye this week in financial markets which I wanted to comment on. The first is that the US results season is in full swing, and albeit that it started well with a number of US investment banks announcing bumper profits last week, this week the news has not been quite so positive. Perhaps the most eye-catching numbers were those from Alphabet and Tesla (two of the so-called Mag7). Unfortunately, both sets of results have been met with disappointment. In the case of Tesla, the numbers missed expectations, but possibly more important was the company's warning that investment in AI infrastructure would take longer to translate into 'meaningful revenue and earnings', whilst at the same time announcing increased capex over the next two to three years in Cybercab/Robotaxi, Optimus (humanoid robots) and AI infrastructure. _(Neil in the margin: The 'Magnificent Seven' – Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla. This handful of mega-caps has driven the bulk of US index returns, so when two of them wobble the whole market pays attention.)_ _[Embedded media](https://www.tesla.com/robotaxi)_ My take on this is that this massive investment in these ground-breaking technologies may well pay off in the longer term, but if Tesla cannot provide tangible evidence of this in the short term, investors are likely to be more sceptical right now. Alphabet also disappointed the market, but not because it missed earnings expectations. On the contrary, its Q2 earnings were well ahead of expectations, led by phenomenal 82% year-on-year growth in its cloud revenues. Advertising revenues were above expectations, but search revenues were below. What spooked the market, rather like Tesla, was the announcement that the business had increased its expectations for AI capex this year to above $200bn from a previous $190bn, combined with the fact that in Q2, for the first time since going public in 2004, it had negative free cash flow of $5.9bn. _(Neil in the margin: Free cash flow is what's left after capital spending. For a business as profitable as Alphabet to go negative signals just how enormous the AI capex bill has become – it's spending faster than even its cash gusher can cover.)_ Right now, the market appears pretty sensitised to this more than anything else, and so the reaction has been pretty negative. ## A 10x chip On a more positive note, albeit that this didn't attract much attention, was a story in the AI media space which stated that Nvidia's next-gen chip appears to be 10x more efficient, as measured by TPS/MW (tokens per second per megawatt), than its previous Blackwell chip. _[Embedded media](https://blogs.nvidia.com/blog/vera-rubin/)_ If true, this is very significant, given this is a well-known data centre performance metric that measures how many output tokens (the fundamental units of text generated by AI) a system can produce per second for every megawatt of power it consumes. I am struggling to recall anything in the past that I am aware of that, in one step of tech evolution, delivered a 10x improvement in efficiency. As an aside, this might also highlight how the US's chip technology is still some way ahead of that in China. ## The buyback capital of the world Finally, to the UK stock market, and a subject that I will write about in a bit more detail in the future. According to some [recent analysis undertaken by Schroders](https://www.schroders.com/en-gb/uk/institutional/insights/buybacks-in-the-uk-are-increasingly-popular-here-s-how-they-could-be-better-/), the UK has become the share buyback capital of the world. As is shown in the chart below, the UK equity market has the highest proportion of large companies buying back at least 1% of their shares over the previous twelve months. Aside from the frequency and scale of bids in the market, this clearly underwrites once again how cheap it is, and the fact that the percentage of companies doing this is pretty much twice that in continental Europe tells you all you need to know about what the boards of UK public companies think about their share prices. _(Neil in the margin: A buyback is a company repurchasing its own shares, shrinking the count and boosting per-share earnings. Boards tend to do it when they judge the stock cheap, which is Neil's point about UK valuations here.)_ ![The buyback capital of the world](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc-uk-buyback-capital-d43950c95bb0-light.png) _Boards buy their own shares when they think the market has mispriced them. The UK now tops every major market for buyback frequency – roughly twice the rate in continental Europe – which tells you what UK boardrooms think of their share prices._ ## What to look out for next week It is a massively busy week for macro data on both sides of the Atlantic. I will be most interested in the US labour market and inflation data, and in the UK the focus for me will be the commentary accompanying the Bank of England's interest rate decision, which will be announced on Thursday. I expect no change in rates, but I do expect an upgrade to the first-half growth forecast and a downgrade to the Bank's inflation expectation. Also of interest will be how Huw Pill and Megan Greene have voted. They may both find it hard still to be voting for a rate increase given how wrong they have been about inflation, but one can never underestimate how entrenched their academic perspectives are. _(Neil in the margin: Two members of the Bank's Monetary Policy Committee, both long-standing hawks. The MPC votes 9-way on rates, and their published individual votes are read as a signal of how the internal balance is shifting.)_ The UK results season also kicks off in earnest next week, with about fifty companies reporting. Of most interest to me will be the numbers emerging from the banks sector, which I will be watching closely.