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Weekly podcast – Market overview
This week, Equity Research Analyst Oli Creasey is joined by Richard Carter, CFA, Head of Fixed Interest Research, and Ben Barringer, Head of Technology to explore the latest movements in global markets and key sector developments. They discuss the potential for a SpaceX IPO, consider why the recent fall in UK GDP may not be as concerning as it first appears, and explore whether there could one day be opportunities for data centres and memory storage on the moon.
Important information - This is a marketing communication provided for information purposes only and does not constitute independent investment research, investment advice or a personal recommendation.
Market overview
It’s different this time. How many times have we heard that one before? But last week there was a sense that it might just be…well…different this time, at least when it comes to progress on peace talks between Iran and the US. Global equity markets appeared to think so after they ended the week higher, although Friday’s successful market debut for SpaceX, which propelled Elon Musk to trillionaire status, might have contributed to the feel-good factor.
The case for it’s different this time
Now hopes of a peace deal being secured and the Strait of Hormuz being reopened have been raised on numerous occasions throughout the near four-month-old conflict only for these to be swiftly dashed—just take a look at a chart showing the roller-coaster ride the oil price has been on. But last week, and for the first time since the conflict began, US President Trump’s musings that peace was just around the corner or that a great settlement was going to be signed within days were not rejected out of hand by Iran. Instead, the Iranian regime acknowledged progress had been made.
And then there was Trump’s public show of frustration with Israel’s continued offensive in Lebanon. An indication that he felt the stakes were getting intolerably high, not necessarily because time was running out to seal a deal to cap his 80th birthday celebrations, but more so perhaps because the latest set of US inflation data clearly bore the scars of the global energy price shock triggered by the conflict? May’s consumer price index (CPI) reading came in at 4.2%, the fastest annual increase since April 2023. Producer prices were even higher up 6.5% on the year, the highest print since November 2022. With numbers like these it is not so easy for Trump to shrug off the impact the conflict is having on his fellow Americans.
Finally, did the oil price know something the rest of us didn’t? Last week there was a clear escalation in tit-for-tat strikes by both sides, arguably the worst since the current ceasefire was agreed on 8 April. And yet, Brent Crude ended the week below US$90 per barrel having started it above the US$95 level.
A cautionary word
Hindsight is a wonderful thing. It is only thanks to the weekend news announcing the deal that will see the Strait of Hormuz reopened and Iran promise that it will not try to get hold of nuclear weapons that we can say yes, the signs were there that it was different this time.
A word of warning though. All that has been agreed so far is the text of a memorandum of understanding. No agreement has been signed. True, both sides are due to put pen to paper on Friday 19 June. But as the last few months have shown (and Trump’s second term as president for that matter) anything can happen, anytime. Only once the deal has been signed can we say with confidence that it is different this time.
Weekly market moves:
The MSCI All Country World Index (MSCI ACWI) ended the week up 0.6%, bringing the year-to-date (YTD) gain to 10.6%.
United States:
The main US stock market returned to winning ways after finishing the week up 0.7% (+9.1% YTD). A positive week was not a given though. Strong inflation data and hard-to-avoid volatility in artificial intelligence (AI) stocks meant the market spent the first half of the week on the backfoot. However, thanks to a decline in oil prices and a strong SpaceX market debut (the stock finished up 19%), the market more than made up ground lost earlier in the week.
Large-cap growth stocks (-0.8%) underperformed value (+2.5%) for the second week in a row, a further sign of a broadening out in market leadership—large cap growth stocks are heavily weighted to the AI trade and Big Tech. The year-to-date figures show this more clearly with value up +15.7% compared to +3.0% for growth. Small caps have fared the best—a 3.9% weekly rise means YTD they are up +19.3%.
US Treasuries were caught between backward-looking data on the one hand and forward-looking hopes on the other. May’s strong inflation prints strengthened the case for the Federal Reserve hiking rates this year, while a potential reopening of the Strait of Hormuz boosted hopes that the energy price shock can be contained. In the event, the 10-year Treasury yield edged five basis points lower to 4.48% (up 31 basis points YTD); the yield on the 2-year Treasury fell seven basis points to 4.08% (up 61 basis points YTD).
United Kingdom:
UK large caps outperformed their US peers courtesy of a 1.0% gain (+7.2% YTD). Mid-caps fared even better, rising 1.2% (+5.5% YTD). Sterling got in on the act too, ending the week at US$1.34 compared to US$1.33 previously. Gilts took the news of a 0.1% month-on-month contraction in UK GDP during April in their stride. After strong readings earlier in 2026 the data increases the chances that the Bank of England (BoE) will hold off raising rates this week. The 10-year UK gilt yield ended six basis points lower at 4.84% (up 36 basis points YTD).
The week ahead could prove more of a test for gilts. As well as the BoE rate decision, gilts will have to contend with the Makerfield by-election. A victory for Labour’s Andy Burnham could see him launch a leadership challenge against prime minister Sir Keir Starmer. A potential Burnham premiership is seen by markets as being less fiscally disciplined than the incumbent government.
Europe ex UK:
Like the UK, the MSCI Europe ex-UK Index outperformed thanks to a 1.9% gain (+8.9% YTD). Understandable given Europe is more exposed to rising oil and gas prices than the energy independent US and therefore stands to benefit more from a potential end to the Middle East conflict. At the national level, Italy was the standout with a 3.2% rise (+17.5% YTD) followed by Switzerland which ended up 2.4% (+6.4% YTD) and France which gained 1.7% (+5.0% YTD). Germany was the outlier with a 0.5% loss (+0.6% YTD). The euro strengthened against the US dollar, ending the week at US$1.16 compared to US$1.15.
German Bunds also had a positive week with the yield on the 10-year note declining five basis points to 2.99% (up 14 basis points YTD). This was despite the European Central Bank (ECB) raising interest rates for the first time since September 2023 and labelling the outlook as “uncertain” in its post-meeting commentary. Presumably, were a Middle East deal to be signed, the outlook would become less uncertain. All eyes on Friday.
Author
Oli Creasey
Head of Property Research
Richard Carter
Head of Fixed Interest Research
Ben Barringer
Global Head of Technology Research and Investment StrategistTo listen to all the past Weekly Comment podcasts click here or subscribe via the apps below:
