June 25, 2026
What Markets Know That Headlines Don’t
The escalation in U.S.–Iran tensions has pushed oil prices up 53% this year to $87.36 per barrel, reintroducing inflationary pressures and tempering expectations for near-term rate cuts. While the inflationary impulse is notable, history suggests such energy-driven shocks tend to be episodic rather than sustained. Past events—including the 1973 oil embargo, the 1979 Iranian Revolution and the 1990 Gulf War—triggered sharp spikes in oil prices and inflation, but market impacts proved transient once supply adjusted and uncertainty began to fade.
Despite these headwinds, equity markets have remained resilient. The S&P 500 has rallied 19.7% from its March low, delivering an 11.2% year-to-date return. While this sharp rebound has raised concerns around valuations, fundamentals remain supportive. Earnings growth for S&P 500 companies reached 28.6% (Q1 2026)—the strongest since 2021—underscoring the strength of the current profit cycle.
A key differentiator in this cycle is the scale and speed of artificial intelligence (AI)-driven investment. The buildout of AI infrastructure is providing a meaningful offset to higher input costs, reinforcing both corporate profitability and broader economic activity. Global AI-related capital expenditure is expected to approach $1 trillion annually—a very large figure, but still modest relative to the roughly $60 trillion spent each year on operating expenses such as leases and labour. This gap highlights the potential for significant productivity gains as AI adoption accelerates, echoing past technological inflection points such as electrification and the rise of the internet.
While geopolitical uncertainty—particularly around the Strait of Hormuz—remains a risk, markets are increasingly treating it as a supply shock rather than a structural disruption. In parallel, the investment cycle in AI continues to strengthen, reshaping competitive dynamics across industries. The divide is no longer just between companies and people, but between those that effectively leverage AI and those that do not.
Periods of disruption have historically created both volatility and opportunity. The current environment is no different. While risks remain elevated, the combination of resilient earnings and a powerful structural growth driver in AI suggests the medium-term outlook for equities remains constructive.
Glossary
Volatility: Measures how much the price of a security, derivative, or index fluctuates. The most commonly used measure of volatility when it comes to investment funds is standard deviation.
About the Author
Alfred Lam, Senior Vice President, Co-Head of Multi-Asset, joined CI GAM in 2004. He brings over 23 years of industry experience to his portfolio design, asset allocation, portfolio construction, and risk management responsibilities, which include chairing the multi-asset investment management committee and sizing investment bets to drive added value and manage risk. Alfred holds the CFA designation and an MBA from York University Schulich School of Business.
IMPORTANT DISCLAIMERS
This document is provided as a general source of information and should not be considered personal, legal, accounting, tax or investment advice, or construed as an endorsement or recommendation of any entity or security discussed. Every effort has been made to ensure that the material contained in this document is accurate at the time of publication. Market conditions may change which may impact the information contained in this document. All charts and illustrations in this document are for illustrative purposes only. They are not intended to predict or project investment results. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies.
Certain statements in this document are forward-looking. Forward- looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained herein are based upon what CI Global Asset Management and the portfolio manager believe to be reasonable assumptions, neither CI Global Asset Management nor the portfolio manager can assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.
The opinions expressed in the communication are solely those of the author(s) and are not to be used or construed as investment advice or as an endorsement or recommendation of any entity or security discussed.
Certain statements contained in this communication are based in whole or in part on information provided by third parties and CI Global Asset Management has taken reasonable steps to ensure their accuracy. Market conditions may change which may impact the information contained in this document.
Certain names, words, titles, phrases, logos, icons, graphics, or designs in this document may constitute trade names, registered or unregistered trademarks or service marks of CI Investments Inc., its subsidiaries, or affiliates, used with permission. All other marks are the property of their respective owners and are used with permission.
CI Global Asset Management is a registered business name of CI Investments Inc. ©CI Investments Inc. 2026.
All rights reserved. Published (June 25th 2026)
