Alphabet enters the Dow Jones

Global shares moved higher over the week as investors were encouraged by signs of resilience in the US economy, easing concerns over the Middle East and a solid pipeline of successful stock market listings. We saw strong debuts from Bending Spoons, the Italian company behind digital products including Evernote and WeTransfer, and Lime, the electric bike and scooter business headquartered in California. Both listed on the Nasdaq, the US’ stock market dominated by tech companies. Sentiment was further boosted by the inclusion of Google parent Alphabet in the Dow Jones Industrial Average, an index of 30 prominent companies listed on stock exchanges in the US. It’s a move that underscores the growing influence of technology companies in benchmark indices. While a weaker-than-expected US jobs report pointed to a cooling labour market, investors took comfort from the prospect of a less restrictive central bank. Trading volumes were lighter at the end of the week, with US markets closed on Friday for the Independence Day holiday, leaving major benchmarks near record highs.

The FTSE 100 was 1.1% higher over the week by mid‑session on Friday, with the more UK‑focused FTSE 250 also trading 1.4% ahead.

Markets take Starmer resignation in their stride

• After SpaceX, will the IPO race heat up – or is it just hype?
• Tapping into water as an investment mega theme
• Who wins when the consumer gets chooiser?
• Can an executor be a beneficiary of a will?
• What are sustainable funds and how can labels help you choose one?
• Flexible ISA rules: Some ISAs are more flexible than you think
• How to invest in UK government bonds with a gilt fund or ETF
• What are the best ways to invest for children?                                                          

Middle East

A fragile ceasefire in the Middle East remained under strain as diplomatic efforts continued to shore up the US-Iran agreement reached in June. US president Donald Trump said fresh talks would take place in Doha to support implementation of the accord, while Tehran publicly downplayed reports of formal negotiations. Both sides nevertheless reiterated their commitment to the ceasefire framework, which has helped ease tensions in the Strait of Hormuz and reduce fears of a broader regional conflict.

The ceasefire follows months of conflict and a series of dangerous flare-ups that repeatedly threatened to reignite full-scale hostilities. Recent weeks have seen exchanges of strikes between Israel and Iran, with both sides accusing the other of breaching ceasefire understandings through military actions linked to Lebanon and Hezbollah. Although international mediation, led largely by Washington, succeeded in preventing a wider escalation, the underlying disputes remain unresolved. Israel continues to target what it says are security threats from Hezbollah and Iranian-backed forces, while Tehran argues that ongoing operations in Lebanon undermine the spirit of the truce. 

Despite the tensions, financial markets and policymakers have taken some reassurance from the agreement's survival. Shipping traffic through the Strait of Hormuz has started to recover after the lifting of restrictions linked to the conflict, helping to stabilise global energy markets. However, the ceasefire remains highly fragile, with negotiations over Iran's nuclear programme, regional security arrangements and the future of Lebanon all seen as critical tests. The coming weeks are expected to determine whether the current pause in hostilities can evolve into a more durable settlement or whether the region risks sliding back into confrontation.

Economics

The UK economy grew by an unrevised 0.6% in the first quarter of 2026, according to final data released by the Office for National Statistics (ONS) this week. It was the strongest quarterly expansion in a year and an acceleration from revised growth of 0.1% in the final quarter of 2025. The expansion was driven primarily by the services sector, which grew 0.8%, while production and construction also contributed positively, highlighting broad-based economic momentum at the start of the year. However, the figures also exposed pressure on households, with real disposable income per person falling 0.8% and the savings ratio declining to 8.9%, suggesting that stronger headline growth was not matched by improving consumer finances. The ONS also revised full-year 2025 GDP growth down slightly to 1.3% from 1.4%. 

The US labour market showed continued resilience in the latest Job Openings and Labor Turnover Survey (Jolts), with job openings holding steady at 7.6 million in May, above economists' expectations and signalling that demand for workers remains robust despite a slower pace of hiring. Hires were unchanged at 5.2 million, while total separations remained broadly stable at 5.1 million, with quits holding at 3.1 million and layoffs little changed at 1.7 million. The data suggested that the labour market has continued to cool gradually rather than sharply weaken, supporting the view that employment conditions remain healthy even as economic growth moderates. 

However, US job growth slowed sharply in June, with non-farm payrolls – a measure of the number of employees in the US – increasing by just 57,000, well below economists' expectations and down from a downwardly revised 129,000 in May, according to data released by the Bureau of Labor Statistics. The unemployment rate edged down to 4.2%, but the decline was driven largely by a fall in labour force participation to 61.5%, its lowest level since 2021, rather than stronger hiring. Professional and business services, social assistance and healthcare led job gains, while leisure and hospitality shed 61,000 positions. The report also included sizeable downward revisions to the previous two months' payroll figures, reinforcing signs that the US labour market is cooling. The weaker-than-expected data may prompt investors to scale back expectations for further Federal Reserve tightening.

S&P Global’s worldwide manufacturing Purchasing Managers’ Index (PMI) data pointed to a modest improvement in global factory activity during June, with manufacturing conditions expanding across several major economies despite signs of slowing momentum in some regions. The data showed strengthening output in the eurozone, where production growth accelerated and inflationary pressures eased, while China recorded its strongest quarterly manufacturing performance since 2020 and Japan logged its best quarter since 2014. The US manufacturing sector remained in expansion territory for an 11th consecutive month, although growth cooled and employment weakened.

S&P Global's worldwide services PMI releases painted a mixed picture for the global economy, with service-sector activity continuing to expand in many major economies but showing signs of softer momentum and rising cost pressures. Business activity returned to growth in Japan, while the US services sector recorded a modest expansion, supported by stronger activity levels but accompanied by falling employment and elevated inflation pressures. In contrast, the UK services sector slipped into contraction for the first time since April 2025, while eurozone private-sector activity remained subdued as inflation continued to weigh on demand. 

Initial Public Offerings (IPOs)

Bending Spoons, the Milan-based software group behind brands including WeTransfer, Vimeo, Evernote, Eventbrite and AOL, made a strong Nasdaq debut this week after raising about $1.68bn in an initial public offering (IPO) that valued the company at roughly $18.4bn. The company sold nearly 58 million shares at $29 each, above its marketed range, underscoring investor appetite for its acquisition-led growth model, which focuses on buying established but underperforming digital businesses and improving profitability through operational efficiencies and AI-driven product development. Founded in 2013, Bending Spoons has completed more than 50 acquisitions and reported rapid revenue growth in recent years, positioning itself as one of Europe’s most prominent technology listings in the US market. The shares were trading up about 40% at Thursday’s close.

Lime, the Uber-backed operator of shared electric bikes and scooters, listed on the Nasdaq after pricing 6.96 million shares at $25 each, raising about $174m and valuing the company at roughly $1.6bn. The San Francisco-based group operates in around 230 cities across 29 countries and has facilitated more than one billion rides globally. The shares traded flat after listing. 

KNDS, the Franco-German defence group behind the Leopard 2 tank and Caesar artillery system, has pulled its planned dual listing in Paris and Frankfurt, shelving what would have been one of Europe's largest IPOs. The company and its shareholders said they would resume the flotation process when market conditions improve, despite having completed most of the preparation work and investor meetings. The decision was driven by volatility in European defence stocks, which have come under pressure in recent weeks as investors questioned whether governments' ambitious rearmament plans would translate into earnings growth as quickly as expected. 

Company news

Alphabet joined the Dow Jones Industrial Average on Wednesday primarily as part of an effort to modernise the index and better reflect the structure of the US economy. S&P Dow Jones Indices will replace telecom group Verizon with the Google parent to increase exposure to fast‑growing technology sectors such as artificial intelligence, cloud computing and digital advertising. The move was also aimed at addresses a technical issue within the price‑weighted Dow, where Verizon’s relatively low share price meant it had minimal influence on the index, whereas Alphabet’s much higher share price ensures a more meaningful impact. 

Sainsbury's reported an encouraging start to its 2026-27 financial year, with total retail sales excluding fuel rising 2.7% to £9.2bn in the 16 weeks to 20 June, driven by continued market share gains and strong grocery performance. Grocery sales increased 3.6% to £7.6bn as customers responded to the retailer's value offering, including Aldi Price Match and Nectar Prices, while like-for-like sales excluding fuel rose 2.1%. Non-food trading remained more challenging, with general merchandise and clothing sales down 3.7% and Argos sales slipping 0.5%. Despite uncertainty linked to the conflict in the Middle East and its potential impact on inflation and consumer spending, Sainsbury's maintained its full-year guidance for underlying operating profit of £975m-£1.075bn and retail free cash flow of more than £500m. 

US real estate firm Prologis announced a £12.6bn offer for FTSE 100 REIT Segro on June 24, which was swiftly rejected by the company’s board, which said the proposal was “opportunistically timed.” Next week, Segro is expected more details of why it considers the offer opportunitsic. 

Associated British Foods reported a resilient third-quarter performance, with group revenue of £5.3bn broadly flat at constant currencies as growth at Primark, Grocery and Ingredients helped offset weakness in Sugar and Agriculture. Primark delivered 3% sales growth, driven by new store openings and strong growth in the US, although like-for-like sales fell 2.2% amid a challenging consumer backdrop in Europe. Grocery and Ingredients posted solid revenue gains, while ABF maintained its full-year outlook for most of the business. However, the group warned that its Sugar division faces a weaker profit outlook after the prolonged conflict in the Middle East pushed up gas price expectations, increasing production costs for its European operations. 

Nike posted quarterly earnings and revenue that beat Wall Street expectations, despite another sales fall in its key China market. The company said its gross margin increased 8.9% during the quarter, largely due to an expected tariff refund of nearly $986m after the Supreme Court struck down many of President Donald Trump’s global duties. The market was disappointed in its outlook statement and chief executive Elliot Hill admitted the results were “not there yet”.