In Australia, the week's main event was a mixed labour market report. Employment jumped 76,000 in June, yet the unemployment rate held at 4.4% because participation rose alongside it, more people working, but also more looking. Underemployment has climbed roughly half a percentage point in three months as cost-of-living pressures push households to seek more hours. The rub for the RBA: unemployment averaged 4.4% over the second quarter, above its 4.2% May forecast, while there are signs of moderating core inflation. That combination ordinarily leans dovish, but with oil surging markets are still pricing some risk of an August hike. Ten-year yields pushed through 5% and the dollar hovered around 70 US cents, underpinned by the G10's highest cash rate.

The reason for that risk aversion sits in the Gulf. Brent crude broke back above US$100, peaking near $102 (with dated Brent touching $105) after Houthi attacks on Saudi tankers extended the conflict into the Red Sea, leaving oil up roughly 30% for the month, alongside a ~44% rise in European natural gas. The IEA warned there is "no room for complacency": around 290 million of its 400-million-barrel emergency release has already been drawn, though over a billion barrels of government stocks remain. 

Energy is reshaping central bank pricing everywhere. Markets now price around 26 basis points of Federal Reserve tightening by September — hikes, not cuts — while the ECB held but Christine Lagarde revealed several members already favoured a rise, leaving a September move close to fully priced. New Zealand's 4.1% annual inflation keeps the RBNZ on a hiking path, and the yen at 163 to the US dollar, its weakest since 1986, is pressuring the Bank of Japan.

The US earnings season supplied the week's other big story, and the bar for big tech has clearly risen. Semiconductors rallied early on new chip deliveries and record Asian export data, but Alphabet's result crystallised the AI-spending anxiety: revenue up 24% to nearly US$120 billion, yet capital expenditure guidance was lifted to as much as US$205 billion and free cash flow turned negative by almost US$5.9 billion. The shares were marked down almost 7%, Tesla fell 14% on compressed margins, and the Nasdaq dropped 2.4% on Thursday. Two features stand out. Record capex announcements no longer lift  the chip supply chain as they reliably did, and with borrowing costs for the big AI spenders edging up, the market is asking who funds the boom. Yet this still looks more like rotation than liquidation: revenue growth is broadening beyond technology, and the megacaps have lagged the wider US index this year (roughly +1–2% versus +9–10%, approximate). Weakness at the top and improving breadth beneath can coexist, next week's hyperscaler results will show which force wins.

In summary, the story is a familiar one wearing new clothes: an energy shock testing disinflation progress just as markets question the AI capex boom's cash generation. Diversified portfolios are designed for precisely this two-sided risk. The week ahead is consequential, Australian Q2 CPI ahead of the August RBA meeting, and earnings from Apple, Amazon and Microsoft.