Blog week ending, 19th June 2026
Markets:
- Local and global stocks rose broadly this week as investor sentiment improved on positive developments in the Middle East.
- In local stock news, airline stocks Virgin Australia and Qantas soared on the prospect of cheaper jet fuel and fewer disruptions to Virgin’s Middle East flights.
- Shareholders signed off on the $11.7 billion Macquarie consortium-led takeover of logistics group Qube.
- The gold price continued its downward trend as traders bet on a stronger US dollar after the US Fed adopted a more hawkish stance on interest rates.
- The oil price fell to its lowest level since early March as a peace deal was reached between the US and Iran.
Economy:
- The RBA kept its cash rate unchanged at 4.35% in June in a unanimous decision, in line with market expectations. The Board noted that financial conditions were now tighter with signs that economic activity is slowing. Less hawkish language was used in its announcement, but a hiking bias remains.
- Australia’s population rose by 0.3% in the December quarter to 27.8 million people, with the annual growth rate holding steady at 1.5%.
- The US Federal Reserve held Chair Kevin Warsh’s first meeting, with the funds rate held at 3.50-3.75% for the fourth consecutive meeting, in line with expectations. The Fed sees lower economic growth in 2026 but has kept its 2027 forecast, while revising inflation forecasts sharply higher.
- US retail sales increased by 0.9% in May, well ahead of April’s result and market expectations, signalling robust consumer spending.
- US consumer sentiment rose in June, up from May’s all-time low and above market expectations. The modest improvement reflected some relief from easing gasoline prices. Inflation concerns remain a key issue.
- US industrial production increased by 0.1% in May, falling short of market expectations. This follows an upwardly revised 0.9% increase in April. Manufacturing output remained unchanged, while mining production increased and utilities output declined.
- US housing starts fell 15.4% in May, falling to the lowest level since May 2020 and well short of market expectations. High mortgage rates are curbing builder activity with contractors reducing the inventory of new homes for sale.
- The UK economy contracted by 0.1% in April, in line with expectations, following a 0.3% expansion in March. This marked the first contraction since August last year as the effects of the conflict in the Middle East work their way through the economy.
- UK inflation remained at 2.8% in May, its lowest level since March last year and below market expectations of 3%. Inflation slowed in housing & household services, while inflation in food & non-alcoholic beverages decelerated further.
- The Bank of England voted 7-2 to keep the Bank Rate unchanged at 3.75% in June as policymakers weighed easing inflation against continued uncertainty. Two members preferred a hike.
- The Bank of Japan lifted its key short-term rate by 0.25% to 1% in a 7-1 vote at its June meeting, in line with expectations and marking the highest level since September 1995.
- Japan exports surged 17% in May, accelerating from 14.8% in the previous month while marking the strongest growth since November 2022. It was the ninth consecutive increase and ahead of expectations.
- China retail sales fell 0.6% in May, the first annual decline since December 2022, reversing April’s 0.2% rise and missing forecasts. Home prices also fell at a quicker pace in May.
- Chinese investment slumped to levels not seen since the pandemic with fixed-asset investment shrinking deeper than expected to 4.1% in the first five months from a year ago.
- China industrial output rose 4.5% in May compared with the same month last year, accelerating from 4.1% in April and beating estimates.
- Indian inflation rose to 3.9% in May from 3.5% in the previous month, the highest since January 2025. Food inflation was the driver. Inflation remains below expectations and below the Reserve Bank of India’s target.
Politics:
- The US and Iran reached a peace deal to immediately end hostilities and reopen the Strait of Hormuz. The deal involved a 14-point memorandum of understanding, which includes the lifting of US sanctions on Iranian oil, the unfreezing of Iranian funds held abroad, US$300 billion in reconstruction funds, and the cessation of uranium enrichment.
- A US court allowed President Trump’s administration to enforce a 10% global tariff under the US Trade Act.
- Australia’s corporate watchdog is investigating a number of private credit funds and warning industry managers to make sure asset valuations are grounded in realistic assumptions before an end-of-month reporting deadline.
Written by Christopher Lioutas
Chairman – Harbourside Investment Management
