Barclays warns oil shock still caps Europe despite AI-fueled market highs in Stock News 09/05/2026 Global equity markets rallied to fresh highs this week as headlines around a potential U.S.-Iran peace deal broke what Barclays described as “market paralysis,” but the brokerage warned that broader gains remain hostage to the still-closed Strait of Hormuz. Semiconductors have led the advance, rising sharply against the since January while the index ex-semis has largely flatlined, according to Barclays. The brokerage cautioned the trade is “starting to look extended,” even as it is “backed by strong earnings,” with Q1 results comfortably beating estimates, driven largely by AI and technology names. “Wider market breadth and a continued melt-up in equities are contingent on tangible progress regarding the reopening of the Strait of Hormuz,” Barclays said. The energy shock has so far been absorbed through inventory drawdowns, but Barclays warned “these buffers are eroding fast, with the risk of demand destruction rising incrementally.” European equities have borne the brunt of the cap. Since the war began, consumer-exposed and rate-sensitive sectors have posted the steepest losses on the , while only Technology and Energy have recorded gains, per Barclays Research. Europe ex-UK equity funds have seen outflows in seven of the past eight weeks, according to EPFR data cited by Barclays. Barclays maintains a strategic preference for the U.S., Japan and emerging markets over Europe, favoring sectors tied to the investment and technology supercycle and banks over consumer segments. If the Strait reopens, Barclays said EU equities would benefit more on a relative basis given their “sharp underperformance since the war started,” with consumer and rate-sensitive stocks the likely primary beneficiaries of any short squeeze. Weekly equity flows of $2.6 billion came in well below the year-to-date average of approximately $20 billion, per EPFR data. U.S. funds took in $9.3 billion on