Global financial markets faced a period of extreme volatility in July 2026 as escalating war with Iran and Houthi attacks on oil tankers sent energy prices soaring. In response to these geopolitical shocks, the European Central Bank held interest rates steady while warning that persistent energy inflation could necessitate future hikes. Rising crude costs and higher bond yields applied severe downward pressure on equity markets, particularly affecting the mega-cap technology sector. Investors expressed growing skepticism regarding the heavy capital expenditures required for artificial intelligence as companies like Alphabet and Tesla reported underwhelming results. Despite a tight U.S. labor market showing record-low jobless claims, the combination of trade tariffs and maritime blockades fueled global stagflation fears. Consequently, major indices across North America and Europe experienced significant declines while safe-haven assets like gold saw increased demand.