Weekly house view | A deal… to sign a deal
The week in review
The US and Iran said they had reached a framework agreement to end their war and reopen the Strait of Hormuz, a preliminary pact that sent oil prices lower. The agreement, which leaves the fate of Tehran's nuclear programme to further negotiations, is due to be signed on Friday. With expectations of a deal raised before, only for hopes of peace to be dashed, the hope this time is that this is not a memorandum of misunderstanding (MOMU). Prior to news of the agreement, the US Energy Secretary said vessels under US protection were carrying 7 mn barrels of oil per day through the Strait.
The S&P 5001 gained 0.7%. The major stock market news was the initial public offering (IPO) of SpaceX, the largest in history. Shares in the rocket, satellite and artificial intelligence (AI) group soared almost 20% on Friday, giving the group a valuation in excess of USD 2 tn, and making Elon Musk the world’s first trillionaire. AI giant OpenAI also filed to go public in what is shaping up to be a blockbuster year for IPOs, potentially reshaping the investment landscape.
In Europe, Switzerland voted against capping its population at 10 mn, and the European Central Bank raised interest rates by 25 basis points to 2.25%.
Quote of the week
ECB President Christine Lagarde said of the ECB’s decision to hike: “… it’s not an insurance policy interest rate decision, simply because it’s a good monetary policy interest rate decision.” She called the rate rise a “signal” but said it was not “forceful”.
Key data
US consumer prices rose 4.2% year-on-year in May, reaching their highest in three years. The core consumer price index (CPI) rose 2.9%. The US producer price index (PPI) hit 6.5% year-on-year versus expectations for 6.4%. Soaring memory chip prices, driven by AI demand, are stoking “chipflation”. Mounting data centre costs at Oracle highlight this trend. US services inflation is more moderate. An index of US small business optimism fell in May to the lowest level since October 2024.
China’s CPI rose 1.2% year-on-year in May versus an expected rise of 1.3%.
