Weekly house view

The week in review

This week marks the 250th anniversary of US independence. Last week, there was turmoil in the country it won independence from: British Prime Minister Keir Starmer said he would resign, paving the way for rival Andy Burnham to become the seventh prime minister in 10 years. His pick for chancellor will be important for investors.

In the oil market, prices fell to pre-conflict levels. This move was helped by Iraq saying it could join the United Arab Emirates and leave OPEC if the production group does not allow it to raise its output – developments that eclipse delays to the reopening of the Strait of Hormuz. The lower oil price has helped inflation expectations to remain anchored even if last week saw some robust consumer price data.

Despite the falling oil price, “chipflation” is feeding through to consumers, with Apple raising iPad and MacBook prices, blaming the cost of chips amid the artificial intelligence (AI) boom. Its shares duly fell and the Magnificent Seven tech stocks underperformed over the week due to concerns about the return on investment from their capital expenditure.

The S&P 500¹ fell 2% on the week. 

Quote of the week

“I believe that he (the president) has complete confidence in the Fed chair to do the right thing,” Treasury Secretary Scott Bessent said. 

Key data

The US personal consumption expenditures (PCE) price index rose 4.1% in the 12 months through May, the largest increase and first reading above 4.0% since April 2023. Real consumer spending rose 2.1% year-on-year in May. 

Real disposable income rose for the first time since the start of the year.