Where to start on last week and what to expect this week.

Given everything that occurred last week, it’s somewhat difficult to comprehend how equity markets ended the week virtually where they began. The news that Trump opted to launch an attack on Iran’s nuclear bases arrived after the close on Friday, so the market effects will be felt today.

Reflecting on last week, a substantial amount of economic data was released alongside meetings of several central banks, most notably the Federal Reserve. The economic data from the US was, at best, mixed; retail sales and industrial production were weaker than anticipated, while housing starts and permits also declined. The four-week moving average of initial jobless claims continues to rise, now reaching its highest levels in nearly two years. Finally, on Friday, the Leading Economic Index reported a decrease in May. The Fed’s “dot plots” suggested a more divided committee regarding the future path of interest rates. While Powell painted a fairly resilient picture of the US economy as it awaits the impact of tariffs on prices, some market commentators seemed to suggest that he leaned more toward a cut than others. There was some buying of 2-year treasuries last week, but similar to the situation in the equity market, yields finished the week largely where they had started it.

The latest UK retail sales data indicates a challenging period for the sector. In May, retail sales volumes fell by 2.7%, following a 1.3% rise in April. However, the latest GfK Consumer Confidence Index for the UK showed a modest improvement, rising by 2 points to -18 in June 2025 from -20 in May. The Bank of England, like the Fed, emphasised the need to continue monitoring inflation and economic conditions closely before making any further adjustments. The spectre of stagflation is what both committees fear the most.

Markets will open weaker today as they respond to the news that Trump attacked Iran over the weekend, but not by much. When examining the futures market, it indicates a relatively muted reaction to the news; Asian markets are down, albeit slightly. There was a further spike in oil prices over the weekend, but at $77 a barrel, the price remains below its level at the start of the year. The FTSE is indicating a decline of 1/3%.

This week, the Flash Purchasing Manager surveys will provide insights into any changes in global economic trends and business confidence in June. Another week of economic data updates is anticipated in the US, including the final reading for Q1 GDP and May’s core PCE price index. In relation to the UK, aside from the flash PMIs. On Tuesday, we will have the CBI industrial trends for June, and the final estimate for Q1 GDP will be released on Friday. How Iran reacts to Friday’s bombings will also influence investor sentiment.

As we move into June, the market’s focus will shift to the second quarter earnings season, and Trump’s pause on global reciprocal tariffs is set to end on July 8, 2025, for most nations. If these dates are not adhered to through new trade deals, the tariffs will resume, and another period of volatility may follow. One thing history teaches us is that tariffs are not beneficial to economies. He knows that as much as anyone.