Blog week ending, 26th June 2026
Markets:
- Local and global equity markets weakened, following US markets lower, as investors increased bets on US interest rate rises following hawkish Fed comments.
- In local stock news, WiseTech founder and Chairman Richard White is under investigation by the Australian Federal Police for human exploitation and visa fraud after fresh claims were made against him. This comes after previous claims of corporate governance breaches, insider trading, and workplace bullying.
- BHP shares declined after the company flagged a cost blowout and an impairment charge relating to its Jensen Potash Project in Canada.
- Mineral Resources shares fell after the mining services company announced the closure of its Lucky Bay mineral sands mine in regional WA, shedding 110 jobs, citing the impact of the Middle East conflict.
- Worley shares dropped nearly 10% after the service provider to resource companies estimated that the Middle East conflict could impact its earnings by up to $60 million. While no projects have been cancelled, customers may continue to delay the commencement and award of new projects.
- The US dollar rose to near one-year highs, putting downward pressure on other currencies, including the Australian dollar, amid the prospect of higher US interest rates following hawkish signals from the Fed.
- Oil prices continued to ease as more tankers crossed the Strait of Hormuz and US-Iran peace talks advanced.
Economy:
- Australian inflation eased in May compared with the previous month, with fuel prices falling almost 12%. Goods inflation moderated, with transport costs rising at the slowest pace in three months. The RBA’s preferred measure rose 3.6% from the same time last year, ahead of expectations and up from the 3.4% gain in April.
- Full-time employment in Australia increased by 5,200 in May, with the unemployment rate inching down to 4.4% from April’s more than four-year high of 4.5%, in line with market expectations. Overall, employment increased by 40,300, well ahead of estimates and largely reversing April’s losses.
- Australian household spending rose 1.3% in May, rebounding from a 1.1% decline in April. Spending increased across eight of the nine major consumption categories, with the strongest growth in clothing and footwear.
- Australian private sector activity stabilised in May after a drop in the previous month. Services activity was broadly unchanged, whilst factory output continued to fall. Employment grew, although firms continued to reduce outstanding work. New orders shrank, input costs continued to rise sharply, and confidence hit its lowest since March 2020.
- The US economy expanded at a 2.1% annualised pace in the first quarter of 2026, revised up from the 1.6% estimate.
- Core US inflation increased to 4.4% in the March quarter from 2.7% in the December quarter. Inflation in May increased to 3.4%.
- US manufacturing activity strengthened in June, surpassing expectations and reaching its highest level since May 2022. Production growth accelerated at its fastest pace since July 2021 due to the largest surge in new orders since April 2022. However, there was a substantial decline in employment, the sharpest drop since May 2020.
- Eurozone manufacturing activity edged down in June from May, with the sector remaining in expansion for a fifth consecutive month, but growth slowed for a second month as supply chain disruptions linked to the Middle East conflict continued to weigh on activity.
- Producer prices in Germany increased by 2.2% in May compared to the same time last year, after a 1.7% rise in April, marking the second straight month of inflation. It was the fastest increase in producer prices since May 2023.
- UK retail sales rebounded strongly in May, with volumes rising 1.2%. This coincided with UK consumer confidence steadying but remaining deeply in pessimistic territory, with younger people growing more pessimistic.
- Japan’s core inflation remained below the 2% target as government subsidies continued to depress energy costs.
- The Chinese central bank kept its key lending rates at record lows for a 13th straight month in June, as widely expected. Economic data remained mixed, with key consumer data particularly weak.
Politics:
- The Australian Labor Government secured the backing of the Greens in the Senate to pass its investment tax reforms announced as part of the May Budget. The Greens also managed to secure a ban on borrowing for property within SMSFs.
- Iran closed the Strait of Hormuz last weekend, citing US and Israeli violations of the recent memorandum of understanding, particularly Israel’s continued actions in Lebanon. However, US Central Command disputed the Strait had been fully closed.
- Subsequent developments suggested some de-escalation, with US Vice President JD Vance stating that Iran had agreed to allow IAEA weapons inspectors back into the country, while US Treasury officials indicated Tehran had committed to maintaining free and open transit through the Strait.
- The Australian Federal Government will halve its temporary fuel tax cut pushing fuel prices higher, claiming the move was intended to prevent motorists from hoarding lower priced fuel and creating shortages. The reality is the government has a budget problem.
- UK Prime Minister Keir Starmer resigned saying a new leader will be in place by September, the country’s fifth leader since 2022. Disfunction would be an understatement. The long-term mayor of Manchester appears to be the front-runner.
Written by Christopher Lioutas
Chairman – Harbourside Investment Management
