Oil prices hover at $110 per barrel, yet Julius Baer’s Mark Matthews warns the surge is likely temporary, foreseeing a modest 5‑10% drop over the coming months.
The Strait of Hormuz accounts for roughly 20% of global crude flow, but the price spike is disproportionate to the supply risk, suggesting a premium rather than a fundamental shift.
Amid the geopolitical backdrop, Matthews notes that historically, oil price shocks tied to political tensions tend to dissipate within months, mitigating long‑term supply concerns.
Shifting focus to equities, AI remains a structural driver; the S&P 500’s earnings growth is projected between 25% and 29% this year, a figure that eclipses most global peers.
Labor productivity in U.S. sectors such as information technology, professional services, and finance has doubled to an annualized 5% rate since late 2022, underscoring AI’s operational impact.
Looking ahead, market participants should monitor the oil price trajectory for signs of easing, while keeping an eye on AI‑enabled earnings momentum that continues to buoy global equities.