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The Investment Institute by UniCredit

Coffee Break is our daily publication, offering topical insights as an intellectual ingot to start the day.

Winners and losers of 2026 (so far) 31 July 2026

The war in the Middle East, the AI boom and the rotation of safe-haven assets, which have heavily influenced market performance so far in 2026, are set to remain the key drivers in the remainder of the year. But new themes will emerge in the coming months.

STOCKS HAVE PERFORMED WELL WORLDWIDE, DESPITE GEOPOLITICAL RISKS AND HIGHER ENERGY PRICES YTD PERFORMANCE IN LOCAL CURRENCY

Equity Commodities Fixed income Currencies 120% 105% 90% 53% 60% 44% 30% 9% 10% 2% -2% -2% -9% -27% -1% 0% 0% -30% Brent TTF USTs EGBs Taiwan US EU USD Yen EUR Precious Bitcoin natural - S. stocks stocks metals gas Korea stocks Middle East crisis AI hype Safe-haven assets/alternatives Source: Bloomberg, The Investment Institute by UniCredit Note: The performance of Taiwan and South Korean stocks is a simple average of the two equity indices. The performance of US and European equities is measured using the S&P 500 and the STOXX Europe 600, respectively. Currencies are in TWI terms.

THE CONTEXT Those who were expecting a calm year following a stormy 2025 have been deeply disappointed by the series of events that have characterised the first seven months of 2026. Although some episodes may prove more temporary, and might even be reversed in the coming months, their impact on markets and geopolitical equilibrium is unlikely to disappear completely. Ahead of the Coffee Break’s summer break, we take stock of market moves so far this year, highlighting the key performance drivers.

The Investment Institute Coffee Break by UniCredit 31 July 2026

THE DATA Leaving aside the particularities of specific issuers and jurisdictions, we identify three big themes that have shaped market performance so far in 2026. The sudden spike in energy prices, which followed the start of the US-Iran conflict at the end of February, led to a repricing of central bank rate expectations and a sell-off across fixed-income markets. Brent and TTF natural gas prices have risen by around 40% and 100%, respectively, so far this year, leading to a reacceleration of inflationary pressure worldwide. Following a decent rally in January and February, government bonds have come under pressure as investors started to expect tighter monetary policies, with the all-maturity Bloomberg UST and EGB indices almost unchanged from the beginning of the year. Against this backdrop, credit spreads have widened only moderately. Japanese govies have underperformed their peers, due to the government’s plans to substantially increase public spending. By contrast, despite short-term volatility, geopolitical tensions have spared equity markets YTD, which experienced a solid rally across jurisdictions. This positive performance has been driven by an upward revision in earnings expectations and strong investor expectations regarding AI. While hyperscalers were the main beneficiaries of the AI theme in 2025, this year saw strong demand for all companies involved in the AI infrastructure, such as semiconductor firms. This has driven the outstanding rally of stock indices in Taiwan and South Korea (up by 50%), which significantly outperformed US and European stocks (up by 10%). It is important to emphasise that Europe is less exposed to the AI trade and more vulnerable to geopolitical tensions in the Middle East, which have benefited energy stocks that are quite dominant on the continent’s stock exchanges. In this evolving market environment, more traditional safe-haven assets failed to provide protection to investors. This has especially been the case for precious metals, which have lost 10% so far this year. While demand from central banks in emerging markets has remained healthy, some of last year’s gold rally has unwound, partly because of expectations of tighter monetary policies and partly because earlier buying was probably speculative. With respect to currencies, the US dollar has reaffirmed its status as a safe-haven currency, partially offsetting last year’s depreciation, while the euro and the yen have lost ground.…