Stock Market Impact: Higher oil prices and inflation pressures could depress equity markets; Fitch’s adverse scenario projects a 10% equity decline, while AI spending offers near‑term cushioning, especially in Asia.
Listed Companies and Sectors: Energy/oil firms may benefit from $87 Brent price; technology firms see boosted demand for AI solutions; consumer‑focused companies face weaker demand due to squeezed real wages.
Investment Flows: Elevated oil prices may attract FDI into energy projects; robust AI spending could draw FPI into tech equities.
Interest Rates, Inflation, and Liquidity: Federal Reserve and Bank of England expected to hold rates in 2026, cutting only in 2027; ECB likely to raise rates in June 2026 then ease later; policy rates remain higher than 2021, with inflation eroding real wages.
Fiscal or Monetary Policy: Fiscal stance described as “far less expansionary”; monetary policy remains tight with future easing anticipated.
