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The International Monetary Fund said Friday that rapid developments in artificial intelligence could improve protection against cybercrime, but may also introduce new threats capable of destabilizing the financial system on a broader scale.

The IMF warned that a major cyberattack causing significant financial losses could create liquidity pressures, intensify solvency risks and spread disruption throughout global markets.

The organization’s comments reinforce concerns already raised by regulators in the United States, the European Union and other jurisdictions regarding AI technologies that could be used to conduct increasingly advanced cyberattacks.

The world economy has remained more stable than many analysts anticipated after the closure of the Strait of Hormuz, though BCA Research cautioned that recession risks could rise sharply if the disruption continues.

Chief Strategist Peter Berezin highlighted seven major factors that have helped support global growth so far, while warning that “the risk of a recession will increase meaningfully if the Strait of Hormuz remains closed into June.”

The first factor is the delayed nature of oil shocks. BCA Research explained that the full economic impact from spikes in oil prices generally takes time to emerge, with GDP growth usually suffering the most roughly a year after the initial shock.

Second, economies today are less dependent on oil consumption relative to output than they were decades ago, although BCA noted that modern supply chains are now far more interconnected.

Third, inflation expectations over the long term have stayed relatively contained, easing pressure on policymakers to aggressively tighten monetary policy.

Fourth, fiscal measures are helping offset some of the damage, including stimulus tied to the One Big Beautiful Bill Act and tariff-related rebates issued by the U.S. Treasury.

Fifth, businesses have increased precautionary inventory purchases, similar to the buying behavior seen during the COVID-19 pandemic.

Sixth, continued expansion in artificial intelligence investment has provided a major boost to economic activity, with spending on technology equipment and software climbing to a record 4.9% of GDP in the first quarter of 2026.

Seventh, oil markets remain heavily backwardated, reflecting investor expectations that the disruption to supply routes will not be permanent.

BCA Research said it remains neutral on global stocks for now, but warned it “will adopt a more defensive posture” should the energy shock continue for an extended period.

JPMorgan strategist Mislav Matejka is encouraging investors to stay constructive on equities, arguing that recent volatility should be viewed as an opportunity rather than a warning sign of a deeper downturn. He contends that concerns around a sustained stagflationary shock are likely overstated.

In a recent note, Matejka pointed out that the MSCI World index has already delivered what the bank called a “V-shaped rebound,” but cautioned that the strength may not be as broad as it appears.

“Current market breadth is very narrow and nearly all consumer plays are lingering at lows,” the note said, adding that “equities complacency is not all that clear cut.”

On the geopolitical front, JPMorgan suggested that escalating tensions in the Middle East may not necessarily prolong market weakness and could even accelerate a resolution.

“An oil spike and resultant market weakness might not sustain, as an escalation might in fact make an off-ramp more likely,” the bank said.

For investors with a medium-term horizon, JPMorgan continues to recommend using dips to build positions over the next three, six, and 12 months.

The bank highlighted several supportive factors for equities, including solid corporate earnings, a still-accommodative growth policy backdrop, and the possibility that bond yields may struggle to extend their recent rise.

However, U.S. equity valuations remain elevated at roughly 21 times forward earnings. As a result, JPMorgan maintains a preference for international and emerging markets over developed markets.

Among those, the U.K. stands out, according to the bank, offering both relative value and income appeal. It described the market as “a large valuation discount vs other regions, as well as the highest dividend yield globally,” adding that it could serve as “one of the very good places to hide during the risk-off episodes.”

A de-escalation in tensions between the United States and Iran could lead to lower Treasury yields, but Wolfe Research believes rates are unlikely to fall back to the levels seen before the conflict erupted.

In a note released this week, Wolfe Research analyst Stephanie Roth estimated that around half of the nearly 40-basis-point increase in 10-year Treasury yields since the start of the war was driven by the Iran-related shock. The rest of the move, she said, stemmed from stronger economic growth data and the unwinding of a February rally tied to AI-related concerns.

“If/when there is an agreement with Iran, we would not expect yields to return to pre-war levels,” Roth wrote.

According to Wolfe Research, only part of the conflict-related rise in yields is likely to reverse. The firm estimates that “roughly 10–15bp of the war-related move would reverse, with the balance remaining due to firmer growth and a residual risk premium.”

That outlook would keep 10-year Treasury yields trading above pre-conflict levels, in an estimated range of 4.15% to 4.40%.

To assess the increase in yields, Wolfe Research used a sign-restriction model based on daily rate movements. The analysis attributed approximately 19 basis points of the rise to the Iran shock, about 15 basis points to growth repricing, and the remainder to an “other” category.

Roth added that energy prices are expected to remain elevated even if a diplomatic agreement is reached, while lingering geopolitical uncertainty could preserve part of the market’s risk premium. Those conditions, she noted, may prevent a complete reversal in war-related yield gains.

Regarding Federal Reserve expectations, Wolfe Research said the market-implied probability of a rate hike has climbed to roughly 44%. The firm believes that level appears somewhat high relative to its base-case scenario, suggesting there may be room for those expectations to ease, especially if a peace agreement is reached.

Global stock markets climbed to new highs this week after reports of a possible peace agreement between the United States and Iran helped break what Barclays described as “market paralysis.”

However, the bank warned that broader equity gains remain vulnerable while the Strait of Hormuz remains closed.

Semiconductor stocks continue to dominate market gains

According to Barclays, semiconductor shares have significantly outperformed the broader market since January, rallying strongly against the MSCI World Index while the benchmark excluding semiconductor stocks has shown little overall progress.

The brokerage warned that the semiconductor rally is “starting to look extended,” although it added that the move remains “backed by strong earnings,” following first-quarter results that comfortably exceeded expectations, largely driven by artificial intelligence and technology companies.

“Wider market breadth and a continued melt-up in equities are contingent on tangible progress regarding the reopening of the Strait of Hormuz,” Barclays said.

Barclays warns energy buffers are shrinking

Barclays said the impact of the energy shock has so far been managed through the use of existing inventories, but cautioned that “these buffers are eroding fast, with the risk of demand destruction rising incrementally.”

The bank noted that European markets have been among the hardest hit by the current environment.

Since the conflict began, consumer-facing and interest-rate-sensitive sectors within the MSCI Europe Index have posted the steepest declines, while only the Technology and Energy sectors have generated positive returns, according to Barclays Research.

The brokerage also cited EPFR data showing that Europe ex-UK equity funds have experienced outflows in seven of the last eight weeks.

U.S., Japan and emerging markets remain preferred regions

Barclays said it continues to favour U.S., Japanese and emerging market equities over European stocks.

The bank said it prefers sectors connected to long-term investment and technology trends, as well as banking stocks, over consumer-focused sectors.

If the Strait of Hormuz reopens, Barclays believes European equities could outperform on a relative basis because of their “sharp underperformance since the war started.”

The bank added that consumer and rate-sensitive sectors would likely benefit the most from any resulting short-covering rally.

Equity inflows remain subdued

EPFR data referenced by Barclays showed that weekly equity inflows totalled $2.6 billion, well below the year-to-date weekly average of roughly $20 billion.

U.S. equity funds attracted $9.3 billion during the week, while emerging market funds recorded $11.6 billion in outflows, marking a fourth consecutive week of withdrawals.

Money market funds posted their second weekly inflow above $100 billion this year following three weeks of substantial outflows.

So far this year, equity funds have attracted $338.2 billion, compared with $272.7 billion for fixed income and $238.8 billion for money market funds.

UK markets pressured by higher gilt yields

In the United Kingdom, Barclays noted that 30-year gilt yields climbed earlier this week to their highest level since 1998 before partially easing.

The bank added that homebuilder shares have fallen more than 20% since the conflict began as tighter financial conditions weighed on the sector.

Barclays also noted expectations that Labour could lose a substantial number of local election seats.

However, the bank’s economists said any change in party leadership would likely not result in major policy changes before autumn, with potential alternatives expected to remain “sensitive to market concerns around maintaining the fiscal rules.”

Markets await key economic data and U.S.-China summit

Looking ahead, investors are preparing for several major economic releases next week.

The U.S. consumer price index report for April is due on May 12, with Bloomberg consensus forecasts pointing to monthly inflation of 0.7% compared with 0.9% previously.

U.S. retail sales figures are scheduled for May 14 and are expected to show growth of 0.4%, down from the prior reading of 1.7%.

The United Kingdom will also release first-quarter GDP figures on May 14.

Meanwhile, a summit between the United States and China is scheduled to take place in Beijing on May 14.

Inflation-linked bonds, often promoted as protection against rising prices, have struggled alongside the broader bond market as the war involving Iran fuels inflationary pressures across the global economy. At the same time, surging equity markets have continued to attract investor attention.

Since the conflict erupted at the end of February, BlackRock’s London-listed global inflation-linked government bond ETF has declined by roughly 2%, according to LSEG data. That performance closely matches losses seen in the asset manager’s global government bond ETF, while the S&P 500 has climbed 7% and reached record highs this week.

Rising Rates Undermine Traditional Inflation Protection

“TIPS (U.S. inflation-protected bonds) and linkers generally provide relative inflation protection versus nominal bonds,” said Jonathan Hill, head of U.S. inflation strategy at Barclays. “If you think that it’s a pure inflation hedge, then you’re going to be disappointed.”

Inflation-linked bonds are designed to preserve investors’ purchasing power over the long term because their payments are tied to inflation indices. However, in shorter timeframes, they remain vulnerable when markets expect central banks to raise interest rates or delay previously anticipated rate cuts.

As yields rise, the fixed income generated by existing bonds becomes less attractive compared with newly issued debt carrying higher returns. Inflation-linked securities are therefore not immune to broad bond market selloffs.

Large institutional investors such as pension funds that hold these securities until maturity can still benefit from their inflation-adjusted payouts. Yet in the near term, prices can weaken when real yields — interest rates adjusted for expected inflation — increase.

“If inflation goes up, but real yields go up as well, then the duration side of the bond sells off the same as all bonds,” said Hill. Duration refers to a bond’s sensitivity to changes in interest rates, with longer-dated securities typically more exposed.

Investors Shift Toward Equities and Commodities

“Generally fixed income is unattractive,” said Dorian Carrell, head of multi-asset income at Schroders. “You’re better off looking for inflation-adjusted revenue streams, probably on the equity side” — with materials, energy and utilities presenting opportunities.

Investors have increasingly gravitated toward sectors expected to benefit from inflation and commodity price strength, while global stock markets continue to rally strongly.

Shorter-Dated Linkers Attract Interest

Despite the recent weakness, some investors remain interested in inflation-linked bonds. BlackRock data showed that $2.6 billion flowed into inflation-linked ETFs during March, marking the largest monthly inflow since Russia invaded Ukraine in 2022. Another $2.2 billion was added in April.

Part of the appeal comes from stronger long-term performance relative to conventional government bonds. Barclays’ Hill noted that shorter-dated U.S. inflation-linked securities have delivered significantly better returns than the wider Treasury market over the last five years because they are less exposed to sharp moves in yields that can outweigh inflation adjustments.

He added that persistent price pressures tied to factors such as U.S. tax cuts and heavy investment in artificial intelligence could continue to support these securities. Inflation-linked bonds also tend to outperform regular bonds when inflation rises unexpectedly.

“As we’ve seen in the past, short-dated linkers may well work, but long-dated linkers can carry too much duration in an inflation-induced bond market sell-off,” said Lloyd Harris, head of fixed income at Premier Miton Investors.

Portfolio Managers Seek Alternative Inflation Hedges

Many inflation-linked bonds have relatively long maturities. In Britain, for example, the average maturity of index-linked gilts reached 18 years in 2024, compared with 13 years for conventional government bonds.

Marion Le Morhedec, global fixed income CIO at Fidelity International, said her team has instead been using inflation swaps and breakeven trades to express views on future inflation trends more directly.

“The question is really how long this inflation uncertainty will remain,” she said. “Definitely what we are doing in our portfolios is really to keep those short-dated inflation protections.”

Inflation has accelerated in several major economies following the spike in energy prices linked to the Iran conflict. U.S. inflation rose to 3.3% in March from 2.4% in February, while UK inflation also climbed to 3.3% in March. Inflation in the euro zone increased to 3% in April.

Market Momentum Continues to Favor Risk Assets

As inflation concerns intensify, investors have also looked toward assets benefiting directly from higher commodity prices. Bond giant PIMCO noted last week that commodities had “behaved largely as theory would suggest,” posting strong gains during the recent turmoil.

Meanwhile, BlackRock’s Investment Institute said it remains “neutral” on inflation-linked bonds while maintaining an “overweight” position in U.S. equities.

The firm summarized current investor sentiment by saying: “Contained damage to global growth from the Mideast conflict and strong earnings expectations — particularly in tech — keep us risk-on.”

Sulnox Group PLC (AQSE:SNOX)announced a distribution agreement with Aditya Enterprises, an industrial distributor in Western India. The partnership was described as a step forward in pursuing land-based revenue opportunities in one of the world’s fastest-growing energy markets. Read more

The Company also announced a patent grant in Algeria covering its fuel oil reclamation technology, extending its intellectual property portfolio. Read more

Delta Gold Technologies (AQSE:DGQ) announced that, under the Research Sponsorship Agreement with the University of Toronto (UofT), an invention has been made that has triggered Delta’s option to enter into a Technology Licence Agreement. In connection with this, the Company has filed its first provisional patent application.

R. Michael Jones, CEO, said: “We are very excited about the discovery made at the UofT and the progress being made at Penn State. The first Provisional Patent filing, which protects the date of our initial invention, represents a very important milestone and the work continues at pace.” Read more

Ethtry PLC (AQSE:ETHY) has committed a £500,000 strategic investment in a UK offshore facility. The Board describes the move as an important step in its strategy of deploying capital into positions within the energy transition sector, with the aim of generating risk-adjusted returns for shareholders. Read more

Amirose London Holdings PLC (AQSE:ALH)announced the appointment of David Crickmore as a Non-Executive Director. Read more

Connecting Excellence Group PLC (AQSE:XCE)announced it has raised £125,000 through the issue of new ordinary shares. Read more

Newbury Racecourse plc (AQSE:NYR) reported its preliminary results for the twelve months ended 31 December 2025. The Company highlighted that revenue increased by 6% to £23.4m (2024: £22m), Raceday attendance grew by 24% to 165,500 (2024: 134,000) and profit before tax of £1.11m (2024: £1.1m). Read more

Majestic Corporation Plc (AQSE:MCJ) announced that, further to previous announcements, its new 50,000 sq. ft. processing facility in Wrexham, Wales, is now operational and processing material. The Wrexham site is the largest in Majestic’s UK network and central to the Company’s strategy to build a vertically integrated circular economy platform across the UK and Europe.

Peter Lai, Chairman, CEO and Founder, commented: “Bringing the Wrexham facility online is a defining moment for Majestic. It gives us the scale, the proprietary capability and the operating leverage we need to drive towards our targets, while at the same time materially increasing the value of what we deliver to our customers.” Read more

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