The Cambridge Weekly – 22nd June
Published
22nd June 2026
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The Cambridge Weekly
Global financial markets were dominated by a diplomatic breakthrough in the Middle East, where a 60-day extension of the ceasefire was agreed in principle, along with the phased reopening of the Strait of Hormuz. The framework agreement, signed on Sunday 14th June by the US and Iranian presidents, authorised the lifting of the US naval blockade of Iranian ports and clearing of mines from the waterway - though the full physical reopening is not expected before late June. World leaders at the G7 summit in Évian welcomed the deal, while France and the UK pledged naval assistance to help restore safe passage through the strait. Critical issues - including the fate of Iran's nuclear programme - remain unsolved at this point, with further talks to follow in the coming months.
Global equities responded positively to these developments at the start of last week. It is worth noting that analysts have also attributed some of the positive sentiment in markets to SpaceX’s blockbuster public market debut the previous Friday. Conversely, oil prices opened last week sharply lower – Brent crude fell around 5% last Monday, to $83.17 per barrel. It then tumbled further midweek, with the International Energy Agency publishing a detailed report on its 2027 oil market outlook, in which it forecasted a significant supply surplus as Gulf production recovers. Brent crude closed the period to Friday at around $79.95 per barrel, its lowest level since early March. Market reaction for fixed income instruments was more muted, a response which analysts have attributed to lingering inflation concerns and uncertainty around the direction of central banks’ monetary policy.
US Equity Market:
The recent SpaceX initial public offering (“IPO”) – the largest in history – ruled stock market sentiment for much of last week. The debut confirmed continued strong investor demand for exposure to AI-integrated platforms. Despite the lofty price, analysts have warned that the valuation is at a significant premium to historical technology listings.
The broader picture for equities was positive over last week, with the S&P 500 closing to Friday up 0.96%. Performance over the week was also driven by data released by the Census Bureau last Wednesday, showing strong retail sales growth of 0.9% in May. Even with fuel stripped out, a 0.7% rise signalled resilient consumer confidence.
Since the start of the war in the Middle East, the US dollar has risen more than 2% against a basket of peer currencies – highlighting investor belief that the US economy was better placed to weather energy price hikes, compared to European and Asian rivals. Sterling now trades at around 1.32 against the US Dollar.
UK Equity Market:
In the week that marked the 10-year anniversary of the Brexit referendum, British politics continues to create headlines. The results from the Makerfield by-election culminated in a big majority win for Andy Burnham last Friday, electing him in as an MP, and therefore opened the path for a potential challenge for party leadership. Defence spending also remained a key talking point, with Rachel Reeves announcing her intention in seeking to fund defence spending without increasing borrowing.
Softer oil prices caused both BP and Shell stocks to underperform over the period. The FTSE 100 did partially offset this following some optimism surrounding banking and mining stocks as markets digested the steady May inflation print. The FTSE 100 closed the week down 0.99% to Friday.
Inflation, Interest Rates and Bond Markets:
In the UK, a lower-than-expected consumer price inflation print released last Wednesday paved the way for policymakers at the Bank of England (“BoE”) to hold rates steady at 3.75% the following day. Despite the easing of tensions in the Middle East and lowering inflation expectations, markets continue to anticipate a 25 basis points rise in UK interest rates before the end of the year, to curb the above-target (2%) inflation. Conversely, the eurozone saw inflation tick up 20 basis points to 3.2% over May.
In line with the BoE, the Federal Reserve (“Fed”) held its policy rate steady at 3.5-3.75% for the fourth consecutive meeting. However, a more hawkish stance from new Federal Reserve Chair, Kevin Warsh, indicated a stronger desire for price stability. This sentiment triggered a rise in the two-year Treasury yield of 17 basis points, as expectations for future hikes intensified. As a reminder, bond yields move inversely to prices.
In Japan, the central bank policy rate rose another 25 basis points to 1%, a continuation of the rate hiking cycle which began in March 2024. This marks the highest policy rate in the country since 1995 and illustrates the impact of political developments at home and abroad.
What’s on the horizon
With diplomacy now achieved in principle between the US and Iran, investors will be keenly watching to see how the terms play out in practice and whether the peace holds.
A slew of purchasing managers index (“PMI”) data comes out this week, with the US, Japan, UK, and eurozone all reporting. PMI helps assess the health of the manufacturing and services sectors and thus provides some indication of overall economic strength. In the US, new homes sales for May, first quarter GDP, and jobless claims data will also release, alongside personal consumption expenditure data – the key inflation metric the federal reserve uses in rate decisionss.
This material has been written on behalf of Cambridge Investments Ltd and is for information purposes only and must not be considered as financial advice. We always recommend you seek financial advice before making any financial decision.
Past performance is not a guide to future performance.
The value of your investments can go down as well as up and you may get back less than you originally invested.
Source of financial market data: MorningstarDirect.
