Blog week ending, 17th July 2026
Markets:
- Local and global equity markets ended the week softer, as renewed escalation in the US-Iran conflict weighed on investor sentiment and increased market uncertainty.
- German 10-year government bond yields rose above 3% as oil prices surged again following another wave of attacks between US and Iran, amplifying inflation uncertainty. The move has led some investors to question whether the European Central Bank may need to tighten policy further.
- In local stock news, BHP Group is considering the sale of a desalination plant and electricity transmission assets in Chile, as part of its strategy to monetise non-core infrastructure and focus on its core mining operations.
- Ampol shares rose strongly after the fuel retailer and refinery operator secured a $400 million debt facility backed by KKR, strengthening its funding position.
- Steadfast shares gained ground after revealing that KKR had joined an Amwins-led consortium pursuing a $6.7 billion acquisition of the insurance broker, with the group extending its period of exclusivity.
- Oil and energy related stocks outperformed during the week, supported by a more than 10% rise in oil prices driven by the escalating Iran conflict and the ongoing US blockade of the Strait of Hormuz.
- Gold prices slipped below US$4,000 an ounce, as escalating tensions in the Middle East heightened concerns around inflation and interest rates, reducing demand for precious metals.
Economy:
- Australian consumer sentiment rebounded strongly in July, reversing June’s decline as concerns around energy prices, interest rate rises, and labour market weakness eased. Despite the improvement, confidence remains below long-term averages and vulnerable to global economic shocks.
- Australian consumer inflation expectations eased to 4.7% in July, from 5.5% in June, marking the lowest reading since January. The decline reflects moderating headline inflation, although underlying price pressures remain elevated.
- US core inflation fell to 2.6% in June, down from a seven-month high of 2.9% in May and below expectations of 2.8%. Softer housing costs and more moderate price increases across a range of categories helped drive the improvement. Headline inflation also fell to 3.5%, its first decline in five months.
- US producer prices rose less than expected in June, helping to ease concerns about inflation and reducing expectations of further rate increases. Government bond yields moved lower following the release.
- US retail sales rose 0.2% in June, in line with expectations, following an upwardly revised 1% increase in May. While consumer spending remained positive, it marked the smallest increase in five months.
- US pending home sales fell 5.4% in June, ending a four-month streak of gains and marking the sharpest monthly decline since December 2025. Higher mortgage rates continued to weigh on housing demand.
- New US Federal Reserve Chair Kevin Warsh highlighted the challenges AI presents for policymakers, noting uncertainty around its effects on inflation and the labour market. He reiterated that inflation remains a concern and described AI as a positive supply-side shock for the economy.
- The UK economy expanded 0.1% in May, rebounding from a 0.1% contraction in April and matching market expectations. Growth was driven primarily by the services sector.
- UK retail sales rose 1.7% over the year to June, falling short of market expectations for a 2.9% gain, and down from 3.4% in May. The result marked the slowest pace of annual growth since February.
- China’s economy expanded 4.3% in the June quarter versus the same time last year, slowing from 5% in the March quarter and falling short of expectations. It was the weakest annual growth rate since the December quarter of 2022.
- China’s trade surplus widened in June, exceeding forecasts and recording the second-largest monthly surplus on record, as both exports and imports grew more strongly than expected.
- Chinese exports surged 27% year-on-year in June, well above forecasts of 18.2%, driven by strong global demand for AI-related products. Semiconductor exports jumped 122%, while computer and computer parts exports rose 53%.
- China’s crude oil imports fell around 41% from a year earlier in June, reportedly reaching their lowest level in nearly a decade. China significantly scaled back its purchases from global oil markets, helping keep a lid on the global oil price surge, though their stance may be about to change.
- New Zealand’s private sector returned to growth in June, recording its strongest expansion since December 2025. The services sector moved back into expansion territory, while manufacturing activity grew at its fastest pace since July 2021.
Politics:
- The conflict between the US and Iran escalated sharply over the past week, with reports indicating the US struck more than 300 military targets while Iran launched attacks against assets in several countries allied with the US. Iran declared the Strait closed, while President Trump responded by claiming US control over the strategic waterway and proposing a 20% levy on commercial cargo passing through the Strait.
Written by Christopher Lioutas
Chairman – Harbourside Investment Management
