Contents
Market review
Equities were mixed over the week while bond markets fell, marked by the ongoing escalation of the war in the Middle East. The week also included a busy backdrop of earnings reports, updated US tariffs & some varying data prints.
The strikes between the US & Iran have shown little sign of durable de-escalation, with investors left with limited evidence to suggest a peace deal is in sight. Early in the week, Iranian representation met with mediators in Pakistan, with hopes of reviving what's left of the fragile interim deal. However, Trump downplayed any de-escalation story, saying 'They want to desperately meet and until they're ready to meet in a meaningful way, we have no interest in meeting'. On Wednesday evening, the Houthis attacked two oil tankers in the Red Sea, raising fears that the war is widening. As a result, Brent crude rose to over 100 dollars per barrel, as investors reverted back to a scenario of a more sustained supply shock to energy markets.
The first major UK data point of Andy Burnham’s role as UK PM saw UK unemployment lower than expectations, remaining unchanged at 4.9% in the three months to May 2026. While headline inflation numbers of 2.6% were lower than expectations of 2.7% - the lowest reading since March 2025, however this may rise again if oil prices stay elevated. The UK consumer also seems resilient with retail sales rising 1% month-on-month and well ahead of expectations of a -0.3% fall. It wasn't quite the perfect start for Burnham, with government bond yields moving up on higher oil prices and off the back of his comments on using 'any flexibility' possible in the UK's fiscal rules to boost growth.
Within the US, Alphabet & Tesla’s price reaction were both to the downside after reporting earnings. Despite Alphabet beating earnings and revenue expectations for Q2 2026, plans to expand the company’s 2026 capex investment plan to around $200bn vs $186bn expected, led to the share price falling over -3% in after-hours trading, as investors once again questioned if the expenditure on AI can be justified. Tesla’s earnings for the quarter came in below expectations, as solid auto sales were outweighed by a 47% year-on-year surge in operating costs. Meanwhile, Asian markets rose over the course of the week, helped by the rebound in regional chipmakers and AI-linked hardware suppliers.
The US also reinstated tariffs of 10%-12.5% on imports from 60 trading partners, including the UK, China and the EU, replacing the temporary 10% Section 122 tariffs that were due to expire on the 24th July 2026.
Outlook
The broader backdrop remains constructive, but near-term dynamics are increasingly driven by central bank policy, incoming data, and the resilience of corporate fundamentals. Markets remain reactive to geopolitical flare-ups and the potential for inflation tail risks, and more hawkish policy rhetoric — particularly from the Fed — may tighten financial conditions and drive intermittent volatility. Encouragingly, structural growth drivers remain intact, with earnings expectations broadly resilient and corporate balance sheets holding up.
Movers table
Equities |
1 Week |
YTD |
1 Year |
|---|---|---|---|
S&P 500 |
-0.65% |
8.92% |
17.82% |
FTSE 100 |
0.51% |
9.28% |
20.34% |
Euro Stoxx 50 |
0.14% |
9.61% |
19.04% |
MSCI Asia Pacific ex Japan |
3.11% |
21.21% |
32.03% |
MSCI China |
2.53% |
-9.36% |
-6.59% |
Source: Bloomberg as at 08:31am on 24.07.2026.
This content has been prepared by M&G Life Investment Office (LIO) for information purposes only and does not contain or constitute investment advice. Information provided herein has been obtained from sources that LIO believes to be reliable and accurate at the time of issue but no representation or warranty is made as to its fairness, accuracy, or completeness. The views expressed herein are subject to change without notice. Neither LIO, nor any of its associates, nor any director, or employee accepts any liability for any loss arising directly or indirectly from any use of this document. The value of investments and any income from them may go down as well as up and are not guaranteed. Investors may get back less than the original amount invested and past performance information is not a guide to future performance.
‘M&G Life Investment Office (LIO)’ includes the team formerly known as Prudential Portfolio Management Group (PPMG), Prudential Portfolio Management Group Limited, is registered in England and Wales, registered number 2448335.
Send a version to your clients
We've also produced a version of this week's market commentary that can be forwarded directly onto your clients.
Related Insights
-
PruFund range of funds 2026 Strategic Asset Allocation
16 Jun 26
10 min read
