Another AI rally as dotcom boom meets Gulf War
A new World Outlook from a team of City analysts includes a view on oil prices, economic growth forecasts and year-end target for the S&P 500. Graeme Evans reports.
2nd June 2026 13:33
by Graeme Evans from interactive investor
Dario Amodei, the CEO of Anthropic, the company behind the chatbot Claude. Anthropic has submitted its draft IPO filing. Photo: Chance Yeh/Getty Images for HubSpot.
AI-fuelled Wall Street records last night accompanied Middle East oil disruption to reinforce a City bank’s view that investors are experiencing a year “more like 1999 meets 1990”.
The two years continued to collide in yesterday’s dealings as the S&P 500 index and Nasdaq extended their run of gains to an eighth consecutive session, even though the Brent crude oil price rose 4% to about $95 a barrel amid fading hopes of an imminent US-Iran peace deal.
The latest record high for the S&P 500 index followed more AI euphoria after Anthropic submitted its draft IPO filing and traders speculated that OpenAI will follow suit. NVIDIA Corp (NASDAQ:NVDA) shares rose 6% after it unveiled AI-focused chips for personal computers.
The S&P 500 is on course for its best run of weekly gains since 1985’s ten, although Wall Street’s mood softened overnight amid a reminder of the cost of funding the AI boom.
That came from Google owner Alphabet Inc Class A (NASDAQ:GOOGL) after it announced plans to raise $80 billion (£59.4 billion) through a package of equity offerings that includes a $10 billion investment from Berkshire Hathaway Inc Class B (NYSE:BRK.B).
The comparisons with the dotcom boom of 1999 were accompanied by parallels with the 1990 Gulf War as the elevated oil price continues to drag on global growth expectations.
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The base case in Deutsche Bank’s updated World Outlook is that a deal allowing the resumption of Strait of Hormuz shipping during June means that the Brent price falls to $86 a barrel in the fourth quarter and $80 in 2027.
It added: “On the other hand, a prolonged Hormuz closure could push Brent towards $150 a barrel, significantly impacting global growth and pushing Europe into recession.”
The energy shock has trimmed the bank’s estimate of global GDP growth for 2026 since its last report in November to 3%, recovering to 3.2% in 2027. Inflation is revised sharply higher to 3.8% in 2026, leading to an upward turn in the global central bank cycle.
Deutsche Bank continues to target a year-end 8,000 for the S&P 500, meaning a further rise of 5% and now appearing “much more realistic” than many expected in the bank’s November report.
The S&P 500 rose 5.3% in total return terms during May to set a new record, with chip stocks doing particularly well as renewed excitement around AI accompanied the ongoing boost of resilient earnings growth. This was shown by a 22% rise for the Philadelphia semiconductor index, which has taken its year-to-date gains to 81.5%.
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Brent crude oil fell 19.3% in May, marking its biggest monthly decline since the start of pandemic lockdowns in March 2020. The hopes for an end to the conflict meant that fears about stagflation eased dramatically, which supported risk assets as well.
However, growing doubts that the Strait of Hormuz will reopen soon mean that the Polymarket probability of a return to normal traffic last night stood at 22% compared with 36% on Friday.
Deutsche Bank said the global system has shown a substantial degree of flexibility since the start of the crisis, although it said these adjustments cannot paper over the fact that shipments were stalled at 6% of normal in May.
It added: “While we update our base case to assume a supply normalisation sometime in June, we must also raise our oil price forecast to Brent $109 a barrel in Q2 to reflect the continued loss of supply in the meantime.”
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