In summary
- Geopolitics drove markets, but the week ended with a more constructive tone.
- Oil remained the key macro variable, but central banks reminded markets that inflation risk has not disappeared.
- What does Brooks Macdonald think?
- The week ahead shifts attention back to activity and inflation data.
Geopolitics drove markets, but the week ended with a more constructive tone
The main story was the sharp reversal in fears of an immediate Middle East energy shock, as signs of a US-Iran framework and improving conditions around the Strait of Hormuz helped oil prices fall back and supported a relief rally across equities and government bonds. Although markets remained volatile around policy headlines, the week still finished with risk appetite firmer overall, reflecting a meaningful easing in stagflation concerns relative to where sentiment stood at the start of the period. Fresh weekend progress in Middle East talks appears to have reinforced that calmer tone, even if the route to a durable resolution still looks fragile.
Oil remained the key macro variable, but central banks reminded markets that inflation risk has not disappeared
Falling crude prices helped investors reprice the recent inflation scare as largely energy-led, which supported both duration-sensitive assets and broader equity markets. However, the Federal Reserve’s first meeting under Kevin Warsh struck a more hawkish and less predictable tone, while the Bank of Japan also tightened policy, reinforcing the message that central banks are still focused on inflation credibility even as headline pressure eases. The combination left markets balancing a softer energy backdrop against a more restrictive policy narrative.
What does Brooks Macdonald think?
The key takeaway is that markets have moved away from pricing a worst-case geopolitical shock and back towards a more selective, fundamentals-driven backdrop. Lower energy prices and calmer inflation expectations are supportive, but recent market strength still looks driven more by a reduction in tail risks than by a decisive improvement in the global growth outlook. In that context, the more constructive weekend developments in the Middle East are welcome, but investors should remain alert to the risk that either policy hawkishness or a renewed geopolitical setback could quickly bring volatility back into markets.
The week ahead shifts attention back to activity and inflation data
Flash June PMIs from Japan, Germany, the UK and the US are due this week and should offer the clearest early read on how the global economy is absorbing the recent energy shock, while Germany’s Ifo survey follows. In the US, durable goods orders and the May PCE release are both due and will be important tests of whether demand remains firm and whether underlying inflation is still proving sticky after last week’s hawkish Fed message. Elsewhere, China has already started the week by leaving its loan prime rates unchanged for a 13th consecutive month, while earnings from companies such as FedEx and Micron should also provide useful read-across for global demand and the AI cycle. In the UK, politics is currently dominated by a Labour leadership crisis, with Prime Minister Keir Starmer under intense pressure to quit. Andy Burnham’s by-election win has accelerated speculation of a leadership challenge, and potentially a transition of power, leaving near-term political direction and policy clarity uncertain.
In summary
- Geopolitics drove markets, but the week ended with a more constructive tone.
- Oil remained the key macro variable, but central banks reminded markets that inflation risk has not disappeared.
- What does Brooks Macdonald think?
- The week ahead shifts attention back to activity and inflation data.
Geopolitics drove markets, but the week ended with a more constructive tone
The main story was the sharp reversal in fears of an immediate Middle East energy shock, as signs of a US-Iran framework and improving conditions around the Strait of Hormuz helped oil prices fall back and supported a relief rally across equities and government bonds. Although markets remained volatile around policy headlines, the week still finished with risk appetite firmer overall, reflecting a meaningful easing in stagflation concerns relative to where sentiment stood at the start of the period. Fresh weekend progress in Middle East talks appears to have reinforced that calmer tone, even if the route to a durable resolution still looks fragile.
Oil remained the key macro variable, but central banks reminded markets that inflation risk has not disappeared
Falling crude prices helped investors reprice the recent inflation scare as largely energy-led, which supported both duration-sensitive assets and broader equity markets. However, the Federal Reserve’s first meeting under Kevin Warsh struck a more hawkish and less predictable tone, while the Bank of Japan also tightened policy, reinforcing the message that central banks are still focused on inflation credibility even as headline pressure eases. The combination left markets balancing a softer energy backdrop against a more restrictive policy narrative.
What does Brooks Macdonald think?
The key takeaway is that markets have moved away from pricing a worst-case geopolitical shock and back towards a more selective, fundamentals-driven backdrop. Lower energy prices and calmer inflation expectations are supportive, but recent market strength still looks driven more by a reduction in tail risks than by a decisive improvement in the global growth outlook. In that context, the more constructive weekend developments in the Middle East are welcome, but investors should remain alert to the risk that either policy hawkishness or a renewed geopolitical setback could quickly bring volatility back into markets.
The week ahead shifts attention back to activity and inflation data
Flash June PMIs from Japan, Germany, the UK and the US are due this week and should offer the clearest early read on how the global economy is absorbing the recent energy shock, while Germany’s Ifo survey follows. In the US, durable goods orders and the May PCE release are both due and will be important tests of whether demand remains firm and whether underlying inflation is still proving sticky after last week’s hawkish Fed message. Elsewhere, China has already started the week by leaving its loan prime rates unchanged for a 13th consecutive month, while earnings from companies such as FedEx and Micron should also provide useful read-across for global demand and the AI cycle. In the UK, politics is currently dominated by a Labour leadership crisis, with Prime Minister Keir Starmer under intense pressure to quit. Andy Burnham’s by-election win has accelerated speculation of a leadership challenge, and potentially a transition of power, leaving near-term political direction and policy clarity uncertain.
Contact us
0203 418 0257
info@onekc.co.uk
References
Source: https://www.brooksmacdonald.com/resources/insights/weekly-market-commentary
Weekly Market Commentary
In summary
Geopolitics drove markets, but the week ended with a more constructive tone
The main story was the sharp reversal in fears of an immediate Middle East energy shock, as signs of a US-Iran framework and improving conditions around the Strait of Hormuz helped oil prices fall back and supported a relief rally across equities and government bonds. Although markets remained volatile around policy headlines, the week still finished with risk appetite firmer overall, reflecting a meaningful easing in stagflation concerns relative to where sentiment stood at the start of the period. Fresh weekend progress in Middle East talks appears to have reinforced that calmer tone, even if the route to a durable resolution still looks fragile.
Oil remained the key macro variable, but central banks reminded markets that inflation risk has not disappeared
Falling crude prices helped investors reprice the recent inflation scare as largely energy-led, which supported both duration-sensitive assets and broader equity markets. However, the Federal Reserve’s first meeting under Kevin Warsh struck a more hawkish and less predictable tone, while the Bank of Japan also tightened policy, reinforcing the message that central banks are still focused on inflation credibility even as headline pressure eases. The combination left markets balancing a softer energy backdrop against a more restrictive policy narrative.
What does Brooks Macdonald think?
The key takeaway is that markets have moved away from pricing a worst-case geopolitical shock and back towards a more selective, fundamentals-driven backdrop. Lower energy prices and calmer inflation expectations are supportive, but recent market strength still looks driven more by a reduction in tail risks than by a decisive improvement in the global growth outlook. In that context, the more constructive weekend developments in the Middle East are welcome, but investors should remain alert to the risk that either policy hawkishness or a renewed geopolitical setback could quickly bring volatility back into markets.
The week ahead shifts attention back to activity and inflation data
Flash June PMIs from Japan, Germany, the UK and the US are due this week and should offer the clearest early read on how the global economy is absorbing the recent energy shock, while Germany’s Ifo survey follows. In the US, durable goods orders and the May PCE release are both due and will be important tests of whether demand remains firm and whether underlying inflation is still proving sticky after last week’s hawkish Fed message. Elsewhere, China has already started the week by leaving its loan prime rates unchanged for a 13th consecutive month, while earnings from companies such as FedEx and Micron should also provide useful read-across for global demand and the AI cycle. In the UK, politics is currently dominated by a Labour leadership crisis, with Prime Minister Keir Starmer under intense pressure to quit. Andy Burnham’s by-election win has accelerated speculation of a leadership challenge, and potentially a transition of power, leaving near-term political direction and policy clarity uncertain.
In summary
Geopolitics drove markets, but the week ended with a more constructive tone
The main story was the sharp reversal in fears of an immediate Middle East energy shock, as signs of a US-Iran framework and improving conditions around the Strait of Hormuz helped oil prices fall back and supported a relief rally across equities and government bonds. Although markets remained volatile around policy headlines, the week still finished with risk appetite firmer overall, reflecting a meaningful easing in stagflation concerns relative to where sentiment stood at the start of the period. Fresh weekend progress in Middle East talks appears to have reinforced that calmer tone, even if the route to a durable resolution still looks fragile.
Oil remained the key macro variable, but central banks reminded markets that inflation risk has not disappeared
Falling crude prices helped investors reprice the recent inflation scare as largely energy-led, which supported both duration-sensitive assets and broader equity markets. However, the Federal Reserve’s first meeting under Kevin Warsh struck a more hawkish and less predictable tone, while the Bank of Japan also tightened policy, reinforcing the message that central banks are still focused on inflation credibility even as headline pressure eases. The combination left markets balancing a softer energy backdrop against a more restrictive policy narrative.
What does Brooks Macdonald think?
The key takeaway is that markets have moved away from pricing a worst-case geopolitical shock and back towards a more selective, fundamentals-driven backdrop. Lower energy prices and calmer inflation expectations are supportive, but recent market strength still looks driven more by a reduction in tail risks than by a decisive improvement in the global growth outlook. In that context, the more constructive weekend developments in the Middle East are welcome, but investors should remain alert to the risk that either policy hawkishness or a renewed geopolitical setback could quickly bring volatility back into markets.
The week ahead shifts attention back to activity and inflation data
Flash June PMIs from Japan, Germany, the UK and the US are due this week and should offer the clearest early read on how the global economy is absorbing the recent energy shock, while Germany’s Ifo survey follows. In the US, durable goods orders and the May PCE release are both due and will be important tests of whether demand remains firm and whether underlying inflation is still proving sticky after last week’s hawkish Fed message. Elsewhere, China has already started the week by leaving its loan prime rates unchanged for a 13th consecutive month, while earnings from companies such as FedEx and Micron should also provide useful read-across for global demand and the AI cycle. In the UK, politics is currently dominated by a Labour leadership crisis, with Prime Minister Keir Starmer under intense pressure to quit. Andy Burnham’s by-election win has accelerated speculation of a leadership challenge, and potentially a transition of power, leaving near-term political direction and policy clarity uncertain.
Contact us
0203 418 0257
info@onekc.co.uk
References
Source: https://www.brooksmacdonald.com/resources/insights/weekly-market-commentary
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