US inflation result cheers markets

Equity markets rose before a sell off later in the week as investors were encouraged by softer-than-expected US inflation data and some upbeat corporate earnings reports, particularly from Wall Street’s investment banks. 

US consumer price inflation slowed to 3.5% in June, while producer prices unexpectedly fell 0.3%, boosting expectations that inflationary pressures are beginning to ease. JPMorgan Chase, Goldman Sachs, Bank of America and Citigroup reported better-than-expected results, reinforcing confidence in the strength of the US economy. 

Although concerns over the US-Iran conflict and oil prices persisted, investors largely focused on improving inflation trends and resilient corporate earnings, helping major equity indices post gains for the week. 

The FTSE 100 was up 0.6% over the week by mid‑session on Friday, with the more UK‑focused FTSE 250 trading 1.0%. Here are the latest articles this week:

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Middle East

The US-Iran conflict remains the biggest source of geopolitical worry for investors, although markets are no longer pricing in the worst-case scenarios seen earlier in the year. After months of fighting that disrupted shipping through the Strait of Hormuz and briefly pushed Brent crude above $100 a barrel, Washington and Tehran reached a memorandum of understanding in June that reopened the vital waterway and allowed Iranian oil exports to resume. However, the ceasefire has proved fragile, with renewed strikes, attacks on commercial shipping and threats of further military action triggering repeated bouts of volatility in energy markets. 

Crude prices have fallen sharply from their highs earlier this year as supply disruptions eased, but periodic flare-ups in the conflict continue to trigger sharp swings in energy prices and inflation expectations. Investors are particularly focused on the Strait of Hormuz, through which roughly one-fifth of global oil trade passes, meaning any threat to shipping has the potential to reignite concerns about inflation, economic growth and central bank policy. 

Economics

US inflation data offered some relief for investors, with consumer price inflation (CPI) easing to 3.5% in June from 4.2% in May as lower energy prices helped cool headline pressures, while core inflation was broadly subdued. Producer prices also surprised on the downside, with the PPI falling 0.3% month-on-month as a sharp drop in goods prices more than offset a modest rise in services costs. Together, the figures suggest that inflationary pressures may be starting to moderate after recent geopolitical-driven price spikes, easing concerns that the Federal Reserve would need to raise interest rates again in the near term. However, inflation remains well above the Fed's 2% target and policymakers are likely to remain cautious.

The UK economy returned to growth in May, with GDP rising 0.1% month-on-month after a 0.1% contraction in April, matching economists' expectations and suggesting activity remained resilient despite a challenging backdrop. Growth was driven by the services sector, which expanded 0.3%, although this was partly offset by declines in both industrial production and construction. 

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Company news

Wall Street's biggest banks delivered a strong start to the US earnings season, with JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup all benefiting from a rebound in dealmaking, booming trading revenues and growing demand for AI-related financing. Goldman Sachs and JPMorgan stood out with record or near-record revenues, while Bank of America and Citigroup also beat expectations as equities trading and investment banking fees surged. It appears that Wall Street is enjoying one of its most profitable periods in years. 

ASML delivered a strong second quarter as booming demand for AI-related semiconductor equipment helped the Dutch chipmaking tools supplier beat expectations and raise its full-year outlook. Management highlighted accelerating investment by customers in advanced logic and memory chips used in artificial intelligence applications. ASML lifted its 2026 revenue forecast to €43bn-45bn and projected a strong third quarter, citing robust order intake and growing visibility into future demand. 

TSMC delivered another blockbuster quarter, underlining its position at the heart of the AI boom as surging demand for advanced chips drove record earnings and an upgraded outlook. The world's largest contract chipmaker reported a 77% jump in second-quarter net profit, beating analyst forecasts, while revenue climbed 36%. Management said AI-related demand remained "extremely robust", prompting TSMC to raise its capital spending plans and forecast third-quarter revenue of up to $45.8bn. The company also lifted its full-year growth outlook and announced further investment in its Arizona operations, highlighting strong demand for its leading-edge manufacturing technologies from customers including Nvidia and Apple.

SpaceX continued the rapid expansion of its Starlink satellite network this week, launching another batch of 29 internet satellites aboard a Falcon 9 rocket from Cape Canaveral. The mission marked the latest in a series of high-frequency Starlink deployments that have helped make Falcon 9 the world's most active launch vehicle, while also underscoring SpaceX's dominance in the fast-growing satellite broadband market. SpaceX shares slipped below their listing price of $135 per share on Wednesday, extending a slide that has erased more than $1tn from the value of Elon Musk’s conglomerate since the peak shortly after its record IPO.

DCC has become the target of a takeover battle led by private equity groups KKR and Energy Capital Partners, which have been pursuing the energy distribution company since April. After initially rejecting an approach that valued the business at about £4.95bn, DCC signalled support for an improved proposal worth £66.72 per share in June. This week, the consortium sweetened its offer again, valuing DCC at up to £5.81bn, or 6,797p per share, through a combination of cash, a dividend and a potential additional payment linked to the sale of DCC's Nexora technology business. However, the deal faces opposition from some major shareholders, including Aviva Investors and Fidelity International, which argue the bids undervalue the company and its long-term growth prospects. The Takeover Panel has extended the deadline for a formal offer until 27 July, leaving DCC caught between a board broadly willing to engage with the bidders and investors pushing for a higher price. 

Ocado shares plunged to a 13-year low after investors reacted negatively to a mixed set of first-half results that highlighted the group's ongoing struggle to secure new international retail partners. While headline revenue and earnings were boosted by £354m of one-off payments linked to the closure of customer fulfilment centres operated by Kroger and Sobeys, underlying performance was far weaker, with revenue excluding those payments rising just 1% and adjusted earnings falling. Investors were particularly disappointed by the lack of tangible progress in signing new US partners following the scaling back of key North American relationships, raising fresh concerns about the growth prospects of Ocado's warehouse automation model. 

SSE's first-quarter trading statement pointed to steady progress across its core networks business, with the energy group maintaining its earnings guidance for the current financial year despite weaker renewable generation caused by unfavourable weather conditions. Strong operational performance in transmission and distribution helped underpin the update, while network investment rose by nearly 70% year-on-year to around $500m as the utility continued to execute its multi-billion-pound infrastructure programme. 

Galliford Try struck a confident tone in its latest trading update, with the construction group expecting a sixth consecutive year of revenue, profit and cash growth as full-year adjusted pre-tax profit comes in at the top end of market expectations. Revenue is set to rise by around 3%, supported by strong execution across its Building and Infrastructure divisions, while margins continued to improve towards the company's long-term target. Management said a high-quality order book of £4.3bn and strong exposure to UK infrastructure, education, defence, healthcare and water projects underpin a positive outlook, reinforcing confidence in the group's ability to deliver further sustainable growth. 

Barratt Redrow reported a solid end to its financial year, with home completions reaching the top end of guidance and adjusted pre-tax profit expected to be in line with market forecasts. The UK's largest housebuilder completed 17,667 homes during the year and maintained a strong net cash position of around £772m, while integration of Redrow continued to deliver cost synergies ahead of plan. However, management struck a cautious note on the outlook, warning that house price inflation is likely to remain minimal and build cost inflation could rise to 3-4% in the coming year. In a move welcomed by investors, the company also announced plans to return £400m to shareholders, primarily through share buybacks.

Atlas Copco delivered a strong second-quarter performance, underpinned by record order intake and continued growth across its industrial businesses. Demand was particularly strong in its Vacuum Technique division, reflecting ongoing investment in the semiconductor industry, while compressors, industrial assembly equipment and power solutions also recorded healthy growth. Despite an uncertain economic backdrop, management said customer activity remains stable and left its near-term outlook unchanged, suggesting confidence that current demand levels can be sustained.

Foxtons issued a profit warning after a sharp deterioration in both its sales and lettings businesses. The London estate agency said the introduction of the Renters' Rights Act led to an unexpected surge in tenancy terminations, particularly in student rentals, forcing it to reverse around £3m of previously recognised revenue. At the same time, political uncertainty, higher-than-expected interest rates and weaker consumer confidence weighed on housing transactions, resulting in a prolonged downturn in its sales division.