Market nightmares come to pass

Surging volatility, rampant oil prices and rising bond yields are combining to spook stock markets, says Chris Beauchamp, Chief Market Analyst at online trading and investing platform IG.

Stocks teeter on the brink as oil pushes through $100

Brent oil futures hit the dreaded three figures today, marking yet another solid day of gains as escalation continues in the Middle East. Volatility is surging and equities are moving further into the red as a return to full-blown conflict now looms, potentially drawing in Israel and more countries in the region. Stocks have been trying to put in a bottom all week, but the lack of any really weighty good news in Alphabet’s results robbed them of the last big catalyst for the week, leaving the field to the sellers. Meanwhile government bond yields continue to climb, spelling major trouble for developed economies and risking a repeat of the March/April 2025 market panic.

Alphabet cash flow turns negative

Of all the things markets hoped for in last night’s Alphabet numbers, negative cash flow was not among them. Yet that is what they got, and it feels like a watershed moment in the AI spending boom. The ability of Alphabet and its peers to generate mountains of cash was a key plank of the market rally, and now that plank is at risk of disappearing. Things could get very ugly, very quickly, especially over the summer weeks when volume is lower and volatility is higher.