🌟 Oil Relief Lifts Markets, But Inflation Still Has the Final Word
It was a week of push and pull. Markets started nervously after last week’s tech sell-off, but finished stronger as hopes of a US-Iran peace deal pushed oil prices lower. That helped shares recover, especially in the UK and Europe. Yet the bigger question has not gone away: will sticky inflation force central banks to stay tougher for longer?
📈 Weekly Scoreboard
Week-to-date change vs last Friday’s close. Levels are end-of-week closes.
| Index | Weekly Change (%) | Current Level |
|---|---|---|
| S&P 500 | +0.65% | 7,431.46 |
| Nasdaq Composite | +0.70% | 25,888.84 |
| EURO STOXX 50 | +2.07% | 6,187.63 |
| FTSE 100 | +1.00% | 10,471.72 |
| Nikkei 225 | -0.85% | 66,020.04 |
| MSCI Emerging Markets | -0.08% | 1,715.97 |
| China SSE Composite | +0.09% | 4,031.51 |
🌍 Global Drivers & Macro
- Oil drove the mood. When oil falls, markets often breathe easier because lower fuel costs can reduce inflation pressure for households and businesses.
- US inflation stayed uncomfortably high. Headline CPI rose to 4.2%, but the calmer core number helped avoid a full market panic.
- The AI trade wobbled, then stabilised. Investors are still excited about AI, but they are questioning how much debt and spending companies need to fund it.
- Central banks turned more important again. The ECB raised rates, and investors now face a big week for the Fed and Bank of England.
🇬🇧 UK Corner
- The FTSE 100 and FTSE 250 both rallied strongly on Friday. The FTSE 100 ended at 10,471.72, while the FTSE 250 closed at 23,325.71, helped by lower oil and broader risk appetite.
- The UK economy dipped in April. GDP contracted by 0.1%, reminding investors that growth is still fragile.
- The Bank of England is expected to hold rates at 3.75% next week. But the risk of a later rise has increased if energy prices keep inflation sticky.
🏦 Asset Movers
- GBP/USD: Sterling ended near $1.34 and was up around 0.5% on the week. The pound shrugged off weak GDP because global risk sentiment improved.
- Oil: Brent crude fell to around $87.33, down more than 6% for the week. That matters because cheaper oil can ease inflation fears.
- Gold: Gold was down about 2.3% on the week. Higher rate expectations reduce the appeal of gold because it pays no income.
📰 Key Headlines
- Reuters: President Trump signals a historic peace agreement with Iran is imminent, ordering the immediate stand-down of planned US military strikes.
- Zacks Investment Research
- BBC Business: The European Central Bank executes an unexpected 25 bps rate hike to defend the Eurozone against localized supply-chain inflation shocks.
- Saxo Bank
- Financial Times: SpaceX files the largest initial public offering in modern history, targeting a $75bn capital raise that pushes its valuation above Tesla.
- Yahoo Finance
- Wall Street Journal: US Core PPI delivers a minor positive surprise, preventing early-week tech declines from morphing into a wider correction.
- Bloomberg: Super Micro Computer (SMCI) faces heavy mid-week volatility after announcing a massive $7 billion primary equity dilution raise.
📑 Companies Reporting
| Company | Index / Region | One-line result summary |
|---|---|---|
| Oracle | US / S&P 500 | Strong cloud growth, but shares fell as investors worried about huge AI-related capital spending. |
| Adobe | US / Nasdaq | Record revenue and better guidance, but the share price weakened on executive change and AI competition worries. |
| Halma | UK / FTSE 100 | Record annual results, but shares dropped sharply as growth guidance slowed. |
| Dollarama | Canada / TSX | Results beat expectations as value-focused shoppers kept spending. |
| LPP | Europe / Poland | Profit jumped, helped by Sinsay, though online disruption and revised targets kept investors cautious. |
⚖️ Investor Sentiment
Equity markets have shifted back into a firm Risk-On posture.
The Cboe Volatility Index (VIX) calmed down to a manageable 19.44, cooling off from panic territory as premium pricing for conflict collapsed. While early-week sentiment showed extreme hesitation due to the ECB’s hawkish stance, the collective data from the CNN Fear & Greed index and retail investor surveys show high institutional and retail conviction returning to cyclical sectors.
Global fund flow data indicated capital moving out of absolute safety hedges like cash and short-term debt instruments and returning to global equity indices.
📅 Next Week’s Radar
- Wednesday 17 June, 07:00 BST — UK CPI. This is the big one for UK DIY investors because it feeds directly into Bank of England expectations.
- Wednesday 17 June, 13:30 BST — US retail sales. A useful check on whether American consumers are still spending despite higher inflation.
- Wednesday 17 June, 19:00 BST — Federal Reserve decision; 19:30 BST press conference. The first meeting under Kevin Warsh will be watched closely for tone, not just the rate decision.
- Thursday 18 June, 07:00 BST and 12:00 BST — UK labour market, then Bank of England decision. Jobs, wages and rates all land within five hours.
- Friday 19 June, 07:00 BST — UK retail sales. A timely check on whether households are coping with higher prices.
⚡ The Final Take
This week served as a textbook reminder of how rapidly geopolitical headlines can rewrite market trends overnight. For UK DIY investors, the dramatic drop in oil provides an immediate cushion against imported inflation, though all eyes must now transition to central banks next week to see if structural interest rates will follow energy prices lower.
© Clearly Investments Ltd. Educational information only. This is not investment advice.
