Blog week ending, 12th June 2026
Markets:
- Equity markets were generally flat to weaker this week, with tech stocks coming under pressure as rising expectations of US rate hikes weighed on sentiment. Ongoing US-Iran tensions also contributed to market caution.
- Reports of a US-Iran deal supported US equities, with markets rebounding in overnight trading on renewed optimism for a resolution.
- SpaceX’s anticipated IPO continues to attract strong investor interest, reportedly oversubscribed by around four times, as expectations build for what could become the largest public offering in history, surpassing Saudi Aramco’s US$29.4 billion listing in 2019.
- In local stock news, gold mining companies came under pressure, as the gold price fell to its lowest daily level since December.
- Westpac shares declined after the bank reported a 20% drop in investor home lending since the Federal Budget, alongside a 10% decline in total mortgages.
- Oil prices were volatile during the week, rising early on escalating US-Iran tensions before easing later in the week on renewed reports of a potential agreement to end the conflict.
Economy:
- Australian consumer sentiment fell 2.9% in June, with housing price expectations dropping sharply by 14.9%.
- Australian consumer inflation expectations eased slightly to 5.5% in June, down from 5.6% in the previous month, and the lowest level since March.
- US inflation rose 4.2% in May, its highest level since April 2023, and up from 3.8%in April. The increase marked a third consecutive monthly rise, driven largely by a 23.5% surge in energy prices.
- US producer prices increased 1.1% in May, exceeding forecasts and lifting annual growth to 6.5%, the highest since November 2022.
- The US economy added 172,000 jobs in May, well above forecasts of 85,000, following a revised 179,00 increase in April. Continued labour market strength has lifted expectations of a further Fed rate hikes.
- The US trade deficit narrowed to US$55.9 billion in April, with the year-to-date deficit improving by 49.1% from a year earlier. Export growth outpaced imports over the period.
- Existing home sales in the US rose 3.2% in April, extending the recovery from March’s seven-month low and coming in ahead of expectations.
- The European Central Bank raised interest rates by 0.25% at its June meeting, the first increase since 2023, as policymakers reaffirmed their commitment to containing inflation. The Bank lifted its inflation forecast to 3% and lowered its 2026 growth outlook to 0.8%.
- The Eurozone economy grew 0.3% in the March quarter, well below earlier estimates of 0.8% and down from 1.2% in the December quarter. It marks the weakest growth since late 2023.
- Japan’s economy expanded 0.5% in the March quarter, accelerating from 0.2% in the previous quarter and exceeding expectations, its strongest quarterly growth since early 2025.
- Chinese exports surged nearly 20% year-on-year in May, far exceeding forecasts and accelerating from April’s pace, supported by continued inventory build-ups and strong demand for semiconductors and AI-related products.
- China’s annual inflation held steady at 1.2% in May, unchanged from the previous month and slightly below expectations.
- The Reserve Bank of India left rates unchanged for a third consecutive meeting, in line with expectations, while revising its growth forecast lower to 6.6%.
- The World Bank downgraded its 2026 global growth forecast to 2.5% from 2.9%, citing the ongoing impact of the Iran conflict. It warned growth could fall as low as 1.3% if energy supply disruptions worsen.
Politics:
- Early in the week, Israel and Iran exchanged missile strikes on Monday, drawing criticism from President Trump. Tensions escalated further after reports that Iran targeted a US helicopter, prompting a US response and renewed threats of additional strikes.
- Later in the week, President Trump announced he had cancelled planned US strikes, stating that a settlement with Iran was close and a final agreement could be signed soon. He added that the naval blockade of the Strait of Hormuz would remain in place until the deal is formalised.
- Recent polling suggests rising support for the One Nation Party, with its primary vote now ahead of Labour and well above the Coalition. The shift appears to have been influenced by recent Federal Budget tax changes.
- The European Union proposed a 21st round of sanctions against Russia, targeting key sectors including banking, cryptocurrency networks, and drone production as part of its response to the ongoing war in Ukraine.
- China cancelled planned meetings with the European Union in Beijing, citing ongoing trade tensions between the two sides.
Written by Christopher Lioutas
Chairman – Harbourside Investment Management
