Weekly Comment: Desperately seeking data (and summer lulls?)

Market overview

Last week was relatively light on the economic data front. How light? Hardly anything of note came out of the UK. In the US, there was the Institute for Supply Management’ services Purchasing Managers’ Index (PMI).  June’s reading of 54.0 was down on May’s 54.5 but came in line with expectations. With prints above 50 indicating expansion, June’s number makes it 24 months in a row of expansion. There were also initial jobless claims for the week ended 4 July which, at 215k, was a little shy of the previous week’s 217k. Apart from some housing data that was pretty much it in terms of numbers coming out of the US.

A bit more to talk about in Europe. A drop in Germany’s annual inflation rate to 2.3% in June from May’s 2.6% was in line with expectations. What was not expected was a 0.9% month-on-month (MoM) increase in exports, a slight increase on the 0.8% seen in April and way above the 0.3% decline the market had been expecting. The beat was put down to higher exports to the US.

Elsewhere, household consumption in the Netherlands grew 1.8% year on year (YoY) in May 2026, an increase on the 1.0% growth seen in April and the highest it’s been for over a year. Meanwhile, Sweden’s economy grew 0.9% MoM in May, an acceleration on April’s 0.6% and the third consecutive month of growth; while consumer prices were up 0.7% YoY in June, slightly down on May’s 0.8% thanks to lower food and transport prices. Not often Dutch and Swedish data feature in the Weekly Comment. Economic releases were that light.

Summer lull?

It wasn’t just the data, trading volumes too were subdued, although that didn’t stop global equities from ending the week in positive territory. The first signs of a summer trading lull, or just a pause for breath before normal service resumes?

Or a blip?

The latter looks the more likely, particularly when this week is set against the backdrop of an increasingly fragile-looking ceasefire in the Middle East following an escalation in tit-for-tat strikes between Iran and the US.

Aside from renewed concerns in the Middle East, the Q2 earnings reporting season is also due to kick off with a host of US banks including JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup all due to report.  No shortage of economic news either. Inflation data for the US and the Eurozone, UK GDP figures for May along with retail sales data, just some of the standout releases due out. Plenty to get stuck into this coming week then.

New PM?

And in the UK, Andy Burnham could take over as prime minister from Sir Keir Starmer as early as next week after the former Manchester mayor secured the backing of 322 out of Labour’s 403 members of parliament. Such a high level of support could see Burnham declared the new Labour leader on Friday 17 July and move into Downing Street (London or Manchester?) as early as Monday 20 July.

A busy week ahead then. Suddenly a summer lull doesn’t sound so bad.

Weekly market moves:

The MSCI All Country World Index (MSCI ACWI) ticked 0.3% higher, bringing the year-to-date (YTD) gain to 12.2%.

United States:

US equities outperformed their global peers with the main US benchmark posting a 1.3% gain (+11.3% YTD). It wasn’t always looking like it would be a positive week though. A step-up in hostilities between the US and Iran and resultant increase in oil prices and inflation concerns had weighed on sentiment. That is until the cavalry, aka semiconductor and artificial intelligence (AI) stocks, came to the rescue.  No surprise then that growth stocks (+5.1% YTD) outperformed with a 2.2% weekly gain compared to value stocks which were largely unchanged (+18.3% YTD) and small caps which ended 0.6% lower (+20.8% YTD).  

Higher oil prices and the negative implications these have for inflation and interest rate expectations meant US Treasuries ended the week modestly down. The yield on the 10-year Treasury rose by seven basis points to 4.56% (up 39 basis points YTD); the 2-year Treasury yield also increased seven basis points to 4.21% (up 73 basis points YTD).

United Kingdom:

UK large caps underperformed after they fell 1.7% over the course of the week (+7.7% YTD). Politics would be the obvious go-to explanation here, but the smaller 0.7% fall by the more domestically focused mid-caps (+5.9% YTD) suggests global factors, specifically rising oil prices and geopolitical tensions, were to blame. The yield on the 10-year UK gilt increased nine basis points to 4.87% (up 39 basis points YTD) while sterling was unchanged at US$1.34.

Europe ex UK:

Like the UK, European stock markets ended the week lower—the MSCI Europe ex-UK Index fell 1.9% (+10.6% YTD). Like the UK, Europe is a net importer of oil and gas and so is seen as being particularly exposed to rising oil prices and any wider inflationary forces these might trigger. The European Central Bank became the first major central bank to raise interest rates to tackle inflation in June. Should oil prices continue rising, expectations for further rate hikes will likely increase too. At the national level, Germany’s main stock benchmark ended down 2.8% (+2.4% YTD), France’s fell 2.0% (+5.0% YTD), while Swiss stocks were off 1.3% (+10.4% YTD). Italian stocks fared the best after edging down 0.4% (+20.3% YTD). German bunds also had a negative week with the yield on the 10-year note rising 13 basis points to 3.06% (up 21 basis points YTD). Finally, like sterling, the euro was unchanged at US$1.14.

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