Q2 2026 unwound much of Q1's shock. The Iran-Israel-US ceasefire (confirmed ~01:00 BST, 8 April) ended the Strait of Hormuz blockade and triggered a sharp cross-asset repricing. WTI fell 24.72% QTD, Brent 22.49%, and the VIX collapsed 42.46%. Equities recovered strongly: Nikkei 225 +30.22%, Nasdaq 100 +24.04%, S&P 500 +12.72%. Gold gave back 17.42% as risk appetite returned. Kevin Warsh took the Fed chair after Jerome Powell's term ended 15 May; his first FOMC (16-17 June) held rates at 3.50-3.75% but delivered a hawkish dot-plot revision, reintroducing a higher-for-longer narrative into Q3.
General market commentary only. Not investment advice, not a trade recommendation, and not personal financial guidance. Capital at risk. Full disclaimer at the bottom.
Executive summary
Q2 did not create a new regime from scratch. It reversed the most extreme elements of Q1's crisis trade while leaving policy-rate uncertainty unresolved.
The quarter opened with Hormuz still closed and markets pricing a binary outcome. The 8 April ceasefire ended a blockade that had disrupted an estimated 17.8 million barrels per day for roughly 38 days. Oil sold off sharply. Equities gap-higher. The fear premium built in Q1 drained out of the market.
By quarter-end, a new institutional transition dominated the story: Warsh confirmed as Fed Chair, first FOMC in June, and a dot plot that reduced implied 2026 cuts and softened the Committee's easing bias.
Gold, Q1's safe haven, fell 17.42% QTD as real yields firmed. Bitcoin declined 14.92% despite the broader equity recovery, a divergence ACG Markets flags as unreliable hedge behaviour.
ACG Markets enters Q3 2026 with the regime shifted from crisis hedging to an untested higher-for-longer paradigm under new Fed leadership.
Key Q2 2026 statistics
Asset / index | Q2 move (3M) |
|---|---|
Nikkei 225 | +30.22% |
Nasdaq 100 | +24.04% |
Russell 2000 | +19.24% |
S&P 500 | +12.72% |
Euro Stoxx 50 | +11.37% |
DJIA | +11.36% |
DAX | +6.69% |
VIX | -42.46% |
Brent crude | -22.49% |
WTI crude | -24.72% |
Gold | -17.42% |
Bitcoin | -14.92% |
USD index | +2.00% |
Fed funds | Held 3.50-3.75% at Warsh's first FOMC |
Prices as of 30 June 2026. Sources referenced in ACG Markets production cycle (Yahoo Finance, Reuters, Bloomberg, FactSet, and others).
Q2 chronology in three phases
Phase 1: Ceasefire and relief rally (1 April to 15 May)
Markets spent early April pricing war vs peace. The 8 April ceasefire triggered one of the largest one-day Brent declines on record (from just above $109 toward $95 in a single session). Equities rallied. VIX began a multi-week decline from Q1 peaks.
Powell's final FOMC (29 April) showed an 8-4 dissent split. His term as Chair ended 15 May. Warsh was confirmed in mid-May. Powell remained on the Board of Governors.
Phase 2: Warsh transition and global rate repricing (16 May to 17 June)
With the Iran premium largely unwound, markets repriced cross-central-bank paths. The ECB cut on 11 June after weak Eurozone PMI and 2.6% YoY CPI. The BoJ held at its 16-17 June meeting.
Warsh's first FOMC held 3.50-3.75% as expected, but the revised Summary of Economic Projections cut implied 2026 cuts and softened easing bias. Session reaction: S&P 500 -1.21%, Nasdaq -1.34%, gold -2.18%, while VIX fell to 17.09 as event risk cleared rather than spiked.
Phase 3: Quarter-end consolidation (18 to 30 June)
Late Q2 data was two-sided but broadly constructive on demand: China NBS PMI beat (Manufacturing 50.3, Non-Manufacturing 50.2), Eurozone retail sales beat (+1.1% MoM vs -0.1% consensus), and Japan retail trade beat (+5.3% YoY). Eurozone flash CPI missed at 3.0% vs 3.1% consensus, opening live debate for the July ECB meeting.
Q2 closed 30 June: S&P 500 7,440.43, Nasdaq 25,820.15, Dow 52,182.74, VIX 17.62. US 10-year yield near ~4.50%.
Asset class performance
Commodities: war premium unwind
Q2 commodities were largely a mirror image of Q1. Energy and precious metals, Q1 winners, were among Q2's weakest performers after Hormuz reopened.
Asset | Q2 return | Note |
|---|---|---|
Cocoa | +45.34% | Best performer; supply-side story |
Rough rice | +12.15% | Agricultural strength |
Copper | +6.17% | Industrial demand resilience |
Gold | -17.42% | Safe-haven unwind + firmer real yields |
Brent crude | -22.49% | Hormuz reopening |
WTI crude | -24.72% | ~43% below April cycle peak near $122 |
Silver | -24.09% | Tracked gold reversal |
Equities: sharp recovery
Index | Q2 return | Note |
|---|---|---|
Nikkei 225 | +30.22% | Best major index; high volatility around June central banks |
Nasdaq 100 | +24.04% | AI capex narrative + lower energy costs |
Russell 2000 | +19.24% | Small caps led US recovery |
S&P 500 | +12.72% | Recovered bulk of Q1 YTD decline |
Euro Stoxx 50 | +11.37% | Energy import cost relief |
VIX | -42.46% | Largest QTD index move tracked |
ACG Markets excludes KOSPI from index tables pending a data-consistency issue identified in Q1 reporting.
Macro and central banks
Geopolitics
The 8 April ceasefire held through Q2. Hormuz reopened in stages, which is why oil kept drifting lower through April and May rather than instantly resetting. By quarter-end, the market's question shifted from when the war ends to how durable the peace is.
Central bank scoreboard (Q2 close)
Central bank | Rate (Q2 close) | Q2 action | Q3 focus |
|---|---|---|---|
Federal Reserve | 3.50-3.75% | Warsh confirmed; June FOMC hawkish dot plot | Durability of higher-for-longer |
Bank of England | 3.75% | Held through Q2 | Dovish repricing risk after late-June data |
ECB | 2.00% (post 11 June cut) | Cut after May PMI collapse | July meeting live after flash CPI miss |
BoJ | 0.75% | Held through Q2 | Further tightening risk; July catalyst |
The Fed and ECB moved in opposite directions within the same June window. Warsh's hawkish debut is the single most consequential Q2 development for global rate markets.
Q3 2026: six themes to watch
- Warsh hawkish paradigm (HIGH risk): Is June a one-meeting recalibration or a durable reaction-function shift?
- ECB July pivot (HIGH risk): Flash CPI miss (3.0% vs 3.1%) opens two-way debate. Lagarde communication is key.
- BoJ tightening and yen carry (HIGH risk): Tokyo CPI and retail beats support tightening narrative; yen still weakened 3.08% QTD.
- AI capex into Q3 earnings (MEDIUM-HIGH): Nasdaq recovery leaned on capex confirmation. Guidance matters against tighter financial conditions.
- Global demand vs higher-for-longer (MEDIUM): Late Q2 PMI and retail beats vs lagged effects of restrictive rates.
- Ceasefire durability (MEDIUM): Acute war risk passed, but gold volatility and yen sensitivity suggest residual tail risk.
Q3 positioning framework (ACG Markets view)
Analytical framework only. Not a recommendation to buy or sell.
Asset / sector | Q2 performance | Q3 view (summary) |
|---|---|---|
US large-cap tech / Nasdaq | +24.04% | Constructive but earnings-dependent |
Small caps / Russell 2000 | +19.24% | Selective; exposed to durable Fed hawkishness |
Nikkei 225 / Japan | +30.22% | Tactical; BoJ July is key catalyst |
Gold | -17.42% | Rebuild selectively; real-yield headwinds remain |
Energy (Brent/WTI) | -22 to -25% | Underweight near-term; ceasefire breakdown is upside risk |
EUR / European rates | EUR -2.02% QTD | Cautious into July ECB |
USD | +2.00% | Constructive on Fed-ECB divergence |
Bitcoin | -14.92% | Unreliable as portfolio hedge in both quarters |
Scenario matrix (ACG Markets estimates)
Scenario | Probability | Summary |
|---|---|---|
Warsh hawkish; BoJ tightens; ECB holds | 20% | USD strong; growth equities underperform |
Warsh moderates; ECB and BoJ hold (base case) | 40% | Continuation of Q2 risk-on with episodic volatility |
ECB resumes cutting; Fed and BoJ hold | 20% | European equities outperform on lower rates |
Ceasefire breakdown / Hormuz disruption | 15% | Risk-off; oil and safe havens rally |
Coordinated global tightening surprise | 5% | Severe equity drawdown; yields spike |
Closing view
Q2 2026 was, in almost every respect, the mirror image of Q1. Q1 closed with stagflation fear and synchronised hawkishness. Q2 closed with geopolitical relief tempered by new Fed leadership and genuine four-way central bank divergence.
The cross-market signal ACG Markets highlights: equities recovered Q1 losses, but gold, bonds, and the yen still priced a more cautious story by quarter-end.
Q3's framework: distinguish headline central bank rhetoric from confirmed policy action. Patience and discipline matter as much as they did in Q1.
About ACG Markets
ACG Markets is the regulated broker in the Alpha Group ecosystem, alongside Alpha Capital (forex prop evaluations) and Alpha Futures (futures prop evaluations). Learn more: What is ACG Markets?
Disclaimer
This Quarterly Market Report is produced by ACG Markets Ltd for informational purposes only. It does not constitute financial advice, investment recommendations, or a solicitation to buy or sell any financial instrument.
All data sourced from Yahoo Finance, Reuters, Bloomberg, FactSet, Finviz, ForexFactory, JPMorgan, Goldman Sachs, Morningstar, Moody's, S&P Global, CNBC, and other institutional sources referenced in ACG Markets' daily production cycle.
Past performance is not indicative of future results. Capital at risk. All prices as of 30 June 2026.
