Blog week ending, 3rd July 2026
Markets:
- Equity markets delivered mixed results this week, with the ASX and several Asian markets moving lower, while US and European equities gained ground following the announcement of another US-Iran ceasefire.
- The “Magnificent 7” group of technology companies shed an estimated US$2.3 trillion in market value during June, as investors became more focused on the scale of capital spending across the sector. Despite this, global share markets still recorded one of their strongest quarters in six years.
- Sydney recorded its weakest weekend home auction clearance rate since 2020, while Melbourne’s fell to its lowest level since September 2021, adding to signs that Australia’s housing market is cooling. Higher interest rates and recently legislated tax reforms have contributed to the softer conditions.
- In local stock news, South32 announced plans to sell its aluminium businesses to Alcoa for up to US$5.6 billion. The company also completed its CEO transition and approved upgrades at its Sierra Gorda mine.
- Falls in bank stocks pulled the financial sector down as the decline in national house prices raised concerns about housing market momentum and future credit growth.
- Coles shares fell sharply after the supermarket giant confirmed it was assessing a potential acquisition of Greencross, the owner of Petbarn, from private equity firm TPG.
- The Japanese Yen weakened to its lowest level since 1986, heightening concerns among policymakers and increasing speculation that Japanese authorities may intervene to support the currency.
- Oil prices finished the week lower, supported by improving US-Iran negotiations and increased supply expectations. This followed rising prices earlier in the week as both sides traded renewed attacks.
Economy:
- Minutes from the RBA’s June meeting reinforced the Bank’s “wait and see” approach, although policymakers maintained a hawkish bias. The three rate increases delivered earlier this year have given the RBA greater flexibility to pause and assess incoming economic data.
- Australian building approvals fell 1.1% in May to 17,019, following an upwardly revised 0.2% decline in April. The fall was driven by a 10.4% drop in apartment approvals, while detached house approvals rose 2.8%. Despite the softer volumes, the value of total approvals jumped 13.6% to a record $21.1 billion, supported by large data centre projects.
- Australian home prices fell 0.4% nationally in June, following a 0.3% decline in May and marking the largest monthly fall since December 2022. Despite the recent softness, prices remain 7.3% higher than a year ago.
- Australia unexpectedly recorded a trade deficit of $3.02 billion in May, compared with a $1.38 billion surplus in April and forecasts for a $2.2 billion surplus. It was the second trade deficit this year and the largest since December 2015.
- New US Federal Reserve Chair Kevin Warsh used his first major international appearance to stress that inflation remains too high, while reaffirming the importance of central bank independence.
- US consumer sentiment rebounded strongly in June from May’s record low, helped by lower petrol prices. While confidence improved it remains close to some of its lowest levels since the 1970s.
- US job openings remained elevated at around 7.6 million in May, exceeding expectations and reaching a fresh two-year high, highlighting continued strength in labour demand.
- US private businesses added 98,000 jobs in June, down from 122,000 in May and below forecasts. The data suggests hiring momentum is easing, although labour shortages persist in some industries.
- Data showed a slowdown in the US manufacturing sector as both output and new orders grew at a slower pace. Employment remained in contraction, whilst falling prices pointed to some easing in cost pressures.
- Eurozone economic sentiment improved for a second consecutive month in June, recovering further from April’s five-year low and surpassing market expectations. Confidence improved across most sectors, although some areas of the economy remain subdued.
- Eurozone manufacturing data showed a decline in growth in June but remained in expansion territory for a fifth consecutive month. Continued growth in manufacturing has helped offset weakness in the services sector.
- Japanese retail sales increased 5.3% in May, accelerating from an upwardly revised 2.8% rise in the previous month and comfortably beating expectations. It was the strongest annual increase since November2023, supported by government stimulus measures.
- China’s manufacturing and services sectors both expanded in June, marking a fourth consecutive month of growth in overall business activity. Manufacturing activity returned to expansion on the back of strong high-tech exports, whilst the services sector unexpectedly expanded.
Politics:
- The US renewed its attacks against Iran after an Iranian drone reportedly struck a commercial cargo vessel. US forces targeted missile and drone storage facilities, along with coastal radar installations, prompting retaliatory attacks by Iran on US military sites in the region before another ceasefire agreement was reached.
- Diplomatic efforts continued in Doha, where a US envoy met with Qatari mediators and US and Iranian representatives held indirect technical discussions. Iran indicated it would not return to direct negotiations with the US until the terms of the existing memorandum of understanding had been implemented.
- President Trump threatened to impose an immediate 100% tariff on imports from any countries that levy a digital services tax on US technology firms, escalating trade tensions and increasing pressure on governments targeting large US tech firms.
Written by Christopher Lioutas
Chairman – Harbourside Investment Management
