Blog week ending, 24th July 2026
Markets:
- Equity markets were weaker this week as investors grew skittish about US AI and technology company spending, new threats from Chinese AI models, and rising oil prices.
- A new Chinese AI model release sparked a technology sell-off, reviving DeepSeek-style fears and dragging AI and chip stocks lower on capital expenditure doubts.
- US June quarter earnings growth expectations have climbed to about 25%, but the pace of growth may be near an inflection point.
- Concerns about rising oil prices saw government bond yields rise strongly (with prices falling) with the Australian 10-year bond yield rising above 5% while the US 10-year bond rose to 4.7%.
- In local stock news, refinery operator Viva Energy shares rose strongly as oil prices hit their highest level since June.
- Perpetual rebuffed a sweetened $2.55 billion takeover bid, marking the second time it has rejected an approach from a bidder linked to Swedish private equity giant EQT.
- BHP shares rose to their highest level in five weeks, helped by surging copper prices.
- NextDC shares rose strongly after the data centre group increased its contracted utilisation.
- Macquarie Group CEO Shemara Wikramanayake announced her retirement after eight years in the top job. Banking and financial services boss Greg Ward will lead the group from November.
- Oil prices surged higher as the conflict between Iran and the US continued to escalate, with Brent Crude prices moving above US$100 a barrel for the first time in two months.
- The Japanese Yen continued to weaken sinking to its lowest level since October 1986 and keeping markets on high alert for possible intervention by authorities to support the currency.
Economy:
- Australia’s seasonally adjusted unemployment rate stood at 4.4% in June, in line with both market expectations and May’s figure. The number of unemployed rose but was offset by an increase in full-time employment. Employment increased to a record high.
- US consumer sentiment rose strongly in July, beating expectations and marking a second straight monthly increase after May’s record low. Sentiment reached its highest level since February. The improvement was broad, supported by easing gasoline prices.
- US industrial production rose slightly in June matching May’s pace but fell short of market expectations. Manufacturing output remained flat. Industrial production expanded strongly over the June quarter.
- The European central bank left its key interest rates unchanged at its July meeting, following a 0.25% increase in June, which was its first rate hike in three years. Since then, policymakers have adopted a more cautious data-dependent, wait-and-see approach.
- Eurozone annual inflation came in at 2.8% in June, down from 3.2% in May and marking its lowest level since February, before the Iran war. While inflation continued to ease, it remains above the central bank’s target.
- The annual inflation rate in the UK eased to 2.6% in June from 2.8% in May, slowing more than the expected fall to 2.7%. This marked the lowest reading since March 2025, driven by moderating transport inflation. Inflation eased in other categories as well.
- The Chinese central bank kept its key lending rates at record lows for a 14th straight month in July, as widely expected. While exports remained strong, caution remained over the fallout from the Iran war and lower June quarter economic growth.
- China’s cabinet pledged to hit its full-year growth target and press on with supportive policies after the country’s June quarter economic growth miss.
- Japan exports and imports in June grew the fastest since November 2022, boosted by semiconductor equipment and a weak Yen.
- New Zealand annual inflation accelerated to 4.1% in the June quarter, from 3.1% in the previous quarter and above forecasts, marking the highest rate since the December quarter of 2024. The central bank may need to act.
Politics:
- The US and Iran exchanged escalating strikes, contributing to doubts that the Strait of Hormuz will reopen for commercial shipping any time soon and puts the memorandum of understanding at risk.
- Yemen’s Iran-aligned Houthis said on Monday they would impose a naval blockade on Saudi Arabia, opening a potential new front in the conflict and raising additional threats to global energy supplies.
- The UK Labour Party confirmed Andy Burnham as its new leader, meaning he will become the country’s next prime minister, the seventh in ten years.
- US President Trump’s 10% global tariffs are set to expire with the White House preparing new tariffs to replace them. These tariffs would target around 60 countries (including Australia), keeping most import tariff rates at or above current levels.
Written by Christopher Lioutas
Chairman – Harbourside Investment Management
