Blog week ending, 31st July 2026
Markets:
- Australian and European stocks trended higher this week whilst other equity markets largely trod water. Australian investors were buoyed by weaker inflation data and European investors by better economic data.
- US 30-year government bond yields rose to their highest levels since July 2007 (the eve of the GFC) as the US central bank left interest rates unchanged with limited guidance.
- In local stock news, refinery operator Viva Energy rocketed more than 8% higher after a strong quarterly update. The move comes after a similar update from competitor Ampol and as the Albanese government announced a $4 million feasibility study to build a large-scale oil refinery in WA.
- Rio Tinto’s shares rose strongly after the miner said its first-half profit ballooned by almost 50% to $9.6 billion.
- CSL shares soared more than 7% to a 13-week high as it flagged clinical trials for immunoglobulin manufactured with its next-generation process.
Economy:
- Australia’s annual inflation rate unexpectedly eased to 3.8% in June from May’s 4% reading but remained above the central bank’s target. It was the softest increase since February with goods inflation moderating to a four-month low whilst transport costs rose at their slowest pace in four months.
- Reserve Bank Governor Bullock noted that while demand growth was moderating as expected after three cash rate increases in 2026, housing and jobs market conditions had eased more steeply than predicted.
- Australian building approvals rebounded in June, but headwinds remain. Building approvals rose 7.2% following a downwardly revised 1.6% decline in May, with the headline lift driven by gains in private sector units and houses.
- The US Federal Reserve left the federal funds rate unchanged at 3.50-3.75% for a fifth consecutive meeting, in line with expectations. Three members dissented, preferring to raise rates by 0.25%.
- The US economy expanded at an annualised rate of 1.5% in the June quarter, slowing from 2.1% in the March quarter and falling short of market expectations. The softer result reflected weaker growth in business investment, particularly across non-residential fixed investment.
- US inflation increased 0.1% in June from the previous month, coming in lower than market forecasts. On an annual basis, prices rose 3.4%, easing from 4.4% in the first quarter.
- US July consumer confidence slipped, coming in below expectations. Sentiment remains pessimistic, though concerns over inflation, oil and geopolitics have eased.
- US manufacturing activity saw a modest slowdown in July, falling short of market expectations, but remaining close to its highest levels in more than four years.
- Overall, US business activity rose strongly in July to its highest level since November boosted by the services sector where business activity accelerated to an eight-month high. Hiring increased for the first time in three months whilst business confidence climbed to an eight-month high.
- Eurozone manufacturing rose in July from June, marking the steepest expansion in three months, supported by a stronger increase in output.
- Eurozone business activity rose in July, coming in well above market expectations, with the reading signalling the first expansion in business activity for four months. The reading showed a renewed expansion in services and the fastest increase in manufacturing output since March 2022.
- The Bank of England left its cash rate unchanged at 3.75% at its July meeting, with a 6-3 majority, while three policymakers preferred a 0.25% increase.
- Japan’s annual inflation rate accelerated to 1.7% in June from 1.5% in the prior month, marking the highest reading since December. A slower decline in electricity and gas prices, as government energy subsidies were scaled back, contributed to the increase, whilst price pressures rose elsewhere.
- China’s industrial profits rose 15.1% in June compared with the same month last year, slowing for the second straight month from May’s 21.1%.
- China’s central bank injected billions of yuan into the banking system through operations to maintain ample liquidity at month-end. The operations reflect the bank’s continued efforts to stabilise money market conditions.
Politics:
- US and Iran paused strikes for consecutive days with reports of progress in Oman-brokered talks on the Strait, the first genuine de-escalation in two weeks. Houthi missiles and drones struck key oil and gas sites in Saudi Arabia.
- Later in the week, Iran fired missiles at US bases in Jordan with the US vowing retaliation, which they subsequently followed through on as US central command hit dozens of IRGC targets.
- The Australian government began engaging with the US over its new 12.5% tariff on Australian imports, with PM Anthony Albanese saying the tariffs were unjustified given Australia’s very strong provisions against modern slavery.
- China’s commerce ministry urged Washington to fully remove the new Section 301 “forced labour” tariffs, calling them a textbook act of protectionism.
This information is general advice and does not take account of investors’ objectives, financial situation or needs. Before acting on this general advice, investors should therefore consider the appropriateness of the advice having regard to their objectives, financial situation or needs.
Written by Christopher Lioutas
Chairman – Harbourside Investment Management
