Last week saw a de-escalation of tensions in the Israel – Iran conflict, which served to lower oil prices and boost investment markets. Oil prices fell by nearly 13% on the week, whilst global stock markets rose by about 1.5% in GBP terms.
Last week also saw the US Dollar sell-off by 1.9% vs the Pound, with a greater pace of interest rate cuts being priced in by the US Federal Reserve over the week. This came on the back of comments from Fed Governors (that they’d be inclined to cut interest rates) and speculation that President Trump (who favours lower interest rates) would announce a new Federal Reserve Governor as early as September or October.
This week, the US jobs numbers on Thursday will be closely watched and attention will also be on the US tax bill (due to pass through the Senate this week) and the July 9th deadline extension for reciprocal tariffs.
Last week
- Oil prices fell heavily as tensions in the middle east de-escalated
- Stock markets rallied, notably in the US and Japan on the back of an improved outlook and some strong corporate data
- The US Dollar sold off, with the Pound reaching its highest level (1.37) vs the US Dollar in 3.5 years.
- Bond markets ticked higher as interest rate cuts got priced into markets following some dovish comments from US Governors
This week
- The monthly US jobs numbers will be the key economic data point this week. These are out on Thursday (due to the 4th July holiday on Friday). Economists (as surveyed by Bloomberg) are expecting 113,000 jobs to have been created in June and for the unemployment rate to nudge up to 4.3% (from 4.2%).
- The market will also be focused on President Trump’s “Big Beautiful Bill”, with President Trump urging lawmakers to stay in session saying “no one goes on vacation until the big beautiful bill is on my desk” by July 4th.
- It’s a quiet week for UK data but we do have a trading update from Sainsbury’s (tomorrow) and full year earnings from Currys and Watches of Switzerland (both on Thursday).
| Equities and Oil | Last week (%) | YTD (%) |
|---|---|---|
| WTI Oil | -12.8 | -8.6 |
| Global | 1.5 | 0.5 |
| UK | 0.7 | 9.5 |
| US | 1.7 | -3.5 |
| Japan | 3.7 | 1.1 |
| Europe ex UK | 1.4 | 14.0 |
| Emerging | 1.6 | 2.9 |
| Bonds, Gold and Currencies | Last week (%) | YTD (%) |
|---|---|---|
| Gold | -4.5 | 14.0 |
| Sterling Corporates | 0.4 | 3.5 |
| GBP vs Japanese Yen | 1.0 | 0.8 |
| GBP vs USD | 1.9 | 9.7 |
| UK Government Bonds | 0.2 | 2.5 |
| High Yield | 0.8 | 4.5 |
Source: Bloomberg. Currency GBP.
More details:
- Last week saw a de-escalation in tensions in the middle east which triggered a near 13% fall in the oil price. In turn, this helped boost stock markets (lower oil prices help growth and help keep a lid on inflation), with global share markets rising by about 1.5%. Within that, Japanese shares saw the biggest rise (3.7%) at a regional level, whilst technology shares saw the biggest rise at a sector level.
- Where is the oil price now and why does it matter? WTI Oil closed out the week at a price of $65.5/barrel. This represented a near 13% fall on the week, following a 30% rise from early May. This comes amidst announcements of a truce in the Israel-Iran war. Importantly for stock markets, the de-escalation in conflict reduces the risk of Iran looking to block off the Strait of Hormuz which is a passageway for about 20% of global oil consumption. Such a move from Iran was always going to be something of a double-edged sword since it would impact China the most due to China being a key strategic partner for Iran and Iran’s largest oil customer (China buys c90% of Iran’s crude exports). A lower oil price puts less upwards pressure on inflation and helps consumers keep up spending on other goods and services (which benefits the global economy and of course stock markets!).
- US Dollar weakness was another key driver last week, with the Pound rising by about 1.9% vs the Dollar over the course of the week. This took gains for the year to be just shy of 10% for the Pound vs the US Dollar. Last week was more a story of Dollar weakness though than Pound strength! This came on the back of increased expectations of imminent interest rate cuts by the US Federal Reserve and an increased likelihood that President Trump will nominate a new Fed Chair that is motivated to cut rates.
- Last week saw Federal Reserve Governor Michelle Bowman saying she’d favour a cut at the July meeting (so long as inflation pressures stay muted). This followed similar comments from fellow Governor Christopher Waller.
- President Trump spoke at the Nato Summit last week saying that the current Fed Chair (Jerome Powell) was “terrible” and “very dumb”, with the Wall Street Journal reporting that Trump is considering announcing his successor (Powell’s term ends in May 2026) in September or October. Trump has posted on Truth Social that US interest rates should be “at least two to three points lower”.
- US stocks (up 1.7% on the week) continued their bounce-back and this helped drive the global share index into positive territory for the year-to-date. Much of the gain has been driven by technology shares (the biggest constituent of the US share market at a c33% index weighting) which are up by 30% since the lows on 8th April 2025. However, one of the broader themes has been the resilience of companies and the ability to digest cost increases. This was evident last week with Nike. Nike noted in their earnings call that today’s tariffs would make for a “gross incremental cost increase to Nike of approximately $1 billion” in its current fiscal year but that they’d be able to “fully mitigate” that cost by tweaking their supply chain and select price increases. Nike rose by c20% on the week and was the best performing stock in the US S&P 500.
- UK share markets rose by about 0.7% last week, with domestic stocks faring best. Despite the 9.5% gain we’ve seen so far this year for UK stocks, the UK remains one of the cheapest of the developed stock markets, trading on a forward price / earnings ratio of 12.2x.
- Bond markets ticked higher last week as yields fell, and credit spreads contracted. Yields fell due to a greater pace of interest rate cuts being priced in, whilst credit spreads contracted due to increased confidence in the outlook for the global economy on the back of the falling oil price. This saw UK gilts rise by about 0.2% on the week and UK investment grade bonds rise by about 0.4% on the week.
Watch our quick video summary for a one-minute recap of the key market moves and what to watch this week.
The value of investments and the income from them can go down as well as up and you could get back less than you invested. Past performance is not a reliable indicator of future performance.
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