🌟 Tech Takes a Breather, but UK Shares Hold Firm
It was a week of mixed markets and shifting mood. The big story was the wobble in AI-linked shares, as investors questioned whether some of the recent excitement had run too far, too fast. At the same time, UK shares held up better, helped by their heavier exposure to banks, energy, miners and defensive dividend payers.
📈 Weekly Scoreboard
| Index | Weekly Change (%) | Current Level |
|---|---|---|
| S&P 500 | -2.0% | 7,354.02 |
| Nasdaq Composite | -4.6% | 25,297.62 |
| EURO STOXX 50 | -1.1% | 6,221.55 |
| FTSE 100 | +1.4% | 10,508.02 |
| Nikkei 225 | -2.7% | 69,360.88 |
| MSCI Emerging Markets | -4.5% | 1,706.40 |
| China (SSE Composite) | -1.5% | 4,027.26 |
🌍 Global Drivers & Macro
- A broad sell‑off in global technology shares followed warnings that central banks, especially the US Federal Reserve, may still have more rate hikes in the tank, making future profits less valuable in today’s money.
- Semiconductor and AI‑linked stocks saw heavy profit‑taking as investors questioned whether recent optimism around artificial intelligence can justify elevated valuations and huge infrastructure spending.
- Oil prices slid for a third straight week as the US‑Iran peace framework advanced and sanctions on Iranian crude were eased, reducing perceived supply risk and dampening inflation expectations.
- Weak business surveys (PMIs) in the UK and eurozone raised concerns about slowing services activity, nudging investors towards safer assets like high‑quality government bonds.
🇬🇧 UK Corner
- The FTSE 100 was a relative winner. It rose around 1.4% over the week, helped by its more value-heavy mix of global banks, energy, miners and defensive companies.
- The FTSE 250 looked more cautious. Smaller and mid-sized UK companies remain more exposed to the domestic economy, where consumer demand and business surveys are still patchy.
- Interest rate expectations remain finely balanced. The Bank of England recently held Bank Rate at 3.75%, but sticky inflation and weaker growth data leave policymakers with an uncomfortable trade-off.
🏦 Asset Movers
- GBP/USD: Sterling was fairly resilient, trading around $1.32 by the end of the week. For UK investors, a stronger pound can trim overseas returns when global investments are translated back into sterling.
- Oil: Brent crude fell heavily over the week, ending near $72 a barrel. Lower oil is helpful for inflation, but it can weigh on energy shares.
- Gold: Gold recovered on Friday but was still weaker over the week. Higher interest rate expectations can hurt gold because it pays no income.
📰 Key Headlines
- Reuters: U.S. core PCE inflation edges up to 3.4% in May, keeping the Federal Reserve on track for an extended rate pause before any potential winter cuts.
- BBC Business: Andy Burnham prepares to enter Number 10 following the emotional resignation of Keir Starmer, promising business continuity and infrastructure focus.
- Financial Times: HMRC introduces flat-rate 22% tax on cash interest held inside investment ISAs to discourage “cash hoarding” by retail platforms.
- Bloomberg: S&P Global Flash US PMI reveals that American manufacturing employment is dropping at its fastest monthly pace since the May 2020 lockdowns.
- Reuters: United Arab Emirates signals potential departure from OPEC following production quota disputes, mimicking Iraq’s recent threats to exit the oil cartel.
📑 Companies Reporting
| Company | Market Focus | Result Summary |
|---|---|---|
| Micron Technology | US semiconductors | Reported much stronger sales and profits, helped by AI-related memory demand, but the wider chip sector still came under pressure. |
| FedEx | US transport / global trade | Beat profit expectations, but investors focused on margin pressure and the freight spin-off. |
| Carnival | Travel / consumer spending | Profits beat expectations, but guidance disappointed and the shares fell. |
| H&M | European retail | Missed profit expectations, with sales momentum still under pressure. |
| Bunzl | UK-listed distribution | Raised its revenue outlook, helping the shares stand out in the UK market. |
| Paychex | US business services | Delivered a small earnings beat, giving investors a read-across on small business hiring and payroll trends. |
⚖️ Investor Sentiment Dashboard
The market’s overall stance shifted into a Neutral posture this week. While the classic “fear gauge,” the VIX, experienced a mild uptick toward the 16.5 level, it remains well below panic thresholds. This indicates that the sell-off in indices like the Nasdaq is a rational rebalancing away from expensive tech and into cheaper sectors, rather than an outright panic.
Fund flows reinforced this nuanced view. Investors pulled money out of highly speculative vehicles, leading to a sixth consecutive week of net outflows from U.S. spot Bitcoin ETFs. Simultaneously, investors rotated into shorter-maturity government bonds and defensive equity funds, underscoring that capital isn’t fleeing the market entirely—it’s just building a safer defensive perimeter.
📅 Next Week’s Radar
- Tuesday 30 June, 15:00 UK: US consumer confidence and job openings data. These will give a fresh read on the American consumer and labour market.
- Tuesday 30 June, after US close: Nike results. This will be a useful check on global consumer demand, China sales and brand spending.
- Wednesday 1 July, 13:15 UK / 15:00 UK: US ADP jobs data and ISM manufacturing. These are important warm-ups before the official jobs report.
- Thursday 2 July, 13:30 UK: US non-farm payrolls. This is the week’s biggest data point and could shape expectations for the next Federal Reserve move.
⚡ The Final Take
This week was a reminder that markets can change tone quickly, especially when valuations are high. The UK market held up well, but global investors became more cautious on AI and growth stocks.
© Clearly Investments Ltd. Educational information only. This is not investment advice.
