The European Central Bank (ECB) received some welcome news on the inflation front last week, with the latest Consumer Price Index (CPI) release coming in below expectations. Having risen in each of the previous five months, driven in part by the surge in energy prices following the US‑Iran conflict, headline inflation eased to +2.8% in June, a decline of 40 basis points (bps) from May and 20bps below consensus forecasts¹. A moderation in energy price pressures was a key driver, with annual energy inflation slowing to +8.7%, still elevated but more than two percentage points below the previous month’s rate. While inflation remains above the ECB’s +2.0% target, the latest reading reduces the immediate pressure for further policy tightening following last month’s rate increase. Investors also welcomed the data, helping to support a strong week for European equities. The MSCI Europe ex‑UK index rose +2.7% (in euro terms), with German and Italian markets among the strongest performers.
In the US, where markets operated on a shortened schedule due to the Independence Day holiday, equities continued to advance. The S&P 500 and Nasdaq gained +1.8% and +2.1% respectively (in dollar terms), with support coming from a broadening of market leadership beyond technology, as financial and consumer‑related sectors also performed strongly. Returning to Europe, the FTSE 100 rose +1.6% to reach its highest level in four months. Meanwhile In Asia, Japan’s Nikkei 225 advanced +0.6% (in yen terms), despite some profit taking among technology and semiconductor names following their exceptional gains in recent months. Investors appeared willing to lock in some profits across areas most exposed to the artificial intelligence (AI) theme, though broader market performance remained supportive. In China, the Shanghai Composite also finished higher, rising +0.4% (in renminbi). While AI‑related sectors faced similar selling pressure, strength elsewhere in the market helped offset those declines and supported a positive overall return.
Commodity markets delivered mixed performance last week. Brent crude eased *0.1% to $71.96 a barrel, continuing to trade around its lowest levels in several months as concerns over supply disruption in the Middle East continued to fade. The gradual normalisation of shipping activity through the Strait of Hormuz and improving sentiment around the US‑Iran agreement helped keep downward pressure on prices, although geopolitical risks remain elevated. Gold moved in the opposite direction, rising +2.3% to $4,172 an ounce.
| Country | Period | Actual | Forecase | Previous | |
| UK | Bank of England Money & Credit Report | June | - | - | - |
| Final GDP QoQ | Q1'26 | 0.60% | 0.60% | 0.60% | |
| Nationwide House Price Index YoY | June | 2.20% | 2.40% | 1.70% | |
| US | Average Wages YoY | June | 3.50% | 3.60% | 3.40% |
| ISM Manufacturing Purchasing Manager Index | June | 53.50 | 54.00 | 54.00 | |
| Non-Farm Payrolls | June | 57K | 110K | 172K | |
| Unemployment Rate | June | 4.20% | 4.30% | 4.30% | |
| Europe | Flash Consumer Price Index Inflation YoY | June | 2.80% | 3.00% | 3.20% |
| Unemployment Rate | June | 6.20% | 6.30% | 6.30% | |
| Japan | Retail Sales YoY | May | 5.30% | 3.20% | 2.10% |
| Unemployment Rate | May | 2.50% | 2.50% | 2.50% | |
| China | Official Manufacturing Purchasing Manager Index | June | 50.30 | 50.10 | 50.00 |
| RatingDog Manufacturing Purchasing Manager Index | June | 51.70 | 51.60 | 51.80 | |
| RatingDog Services Purchasing Manager Index | June | 54.10 | - | 54.40 | |
| Source: Workspace DataStream | |||||
¹ Eurostat – Euro Area Consumer Price Index Inflation, June 2026
SJP Approved: 06/07/2026
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