Weekly Market Recap

The UK

Final data released this week showed that the country’s gross domestic product (GDP) grew at a pace of 0.6% in the first quarter of 2026.

House price growth in the UK accelerated in June, according to the commonly cited Nationwide House Price Index. Prices rose 2.2% year over year (YoY), which was slightly lower than the 2.4% gain that had been expected.

Europe

The rate of consumer price inflation in the eurozone fell to 2.8% in June, a reading that was lower than the 3.2% recorded in May and market expectations for 3%. Inflation slowed in some of the region’s biggest economies, including Germany, France, and Italy. Although the headline inflation rate remained above the European Central Bank’s 2% target, the latest inflation data could ease the urgency for the central bank to act.

China

China’s June PMI data showed manufacturing activity back in expansion territory, suggesting continued resilience despite weakness in parts of the domestic economy. The official manufacturing PMI, which tends to have greater representation of larger companies, rose to 50.3 in June from 50.0 in May, supported by stronger production and new orders as well as continued strength in high-tech manufacturing. The nonmanufacturing PMI, which covers construction and services, edged up to 50.2 from 50.1 in May, above expectations for a modest decline. The private RatingDog manufacturing PMI, which is often viewed as capturing a greater share of smaller and export-oriented firms, eased slightly to 51.7 from 51.8 in May. The data supported China’s uneven-growth narrative, with high-tech and downstream manufacturing performing better than upstream segments and more domestic demand-sensitive areas.

Policy support also remained in focus after the People’s Bank of China (PBOC) launched overnight reverse repo operations this week. The central bank offered CNY 300 billion, or about USD 44 billion, through the new tool on Monday and CNY 600 billion on Tuesday, with Reuters reporting that the overnight rate was 1.25%.

These operations were supportive for liquidity-sensitive sentiment and reinforced the PBOC’s effort to improve short-term funding management. However, the move appeared more consistent with a refinement of the monetary policy framework than the start of a broad easing cycle. Bloomberg reported that some analysts viewed the new overnight operation as part of a gradual shift toward an overnight-rate framework, while the seven-day reverse repo rate remained unchanged at 1.4%. For investors, that distinction matters: Liquidity management could help stabilise risk appetite, but it may not by itself resolve the domestic-demand weakness that continues to weigh on parts of the market.

Japan

Elevated energy prices due to the war in Iran strengthened expectations that inflation would remain persistent, particularly given Japan's reliance on imported energy. Against this backdrop, the yield on the 10-year Japanese government bond rose to 2.78% from 2.60% at the end of the previous week. Investors also continued to price in further monetary policy tightening by the Bank of Japan (BoJ) as well as assessing the implications of the government's recently announced JPY 370 trillion (USD 2.3 trillion) public-private investment road map. Concerns over Japan's fiscal outlook and the prospect of increased government bond issuance added further upward pressure on yields.

The BoJ’s quarterly Tankan survey showed that sentiment among large manufacturers improved for a fifth consecutive quarter, with the index rising to 22 from 17, its strongest reading since 2018. The survey pointed to resilient corporate activity, supported by AI-driven semiconductor demand and robust capital expenditure plans, although respondents also highlighted higher energy costs and global trade uncertainty as growing headwinds.

Separate data showed that industrial production rose 0.5% month over month (MoM) in May, unchanged from April but short of consensus expectations for a 1.1% increase. Petroleum and coal products were among the main drivers, while notable drags were electric and information technology equipment.

Australia

Total private-sector credit increased 0.7% MoM in May, slightly above expectations of +0.6% MoM. YoY growth rose 20bps to 8.2%, remaining around its fastest pace since late 2022. Compositionally, growth in housing credit (+0.5% MoM) slowed for a second consecutive month, while growth in personal credit (+0.6% MoM) and business credit (+1.0% MoM) rebounded. Residential building approvals fell 1.1% MoM in May, below consensus of 0.0% MoM. The decline was driven by the high-density dwelling sector. Australia's goods trade balance returned to a deficit of -AUD 3 billion in May, below expectations for a surplus of AUD 2.2 billion. The outcome reflected a 6.9% MoM fall in export values, driven by lower metal ore and net non-monetary gold exports.

Canada

The Canadian dollar came under pressure, touching a 14-month low, with Bank of America forecasting the Bank of Canada will hold rates through most of 2027 and allow the loonie to weaken further. Consumer confidence edged down to 50.2 in the week ending 12 June, reflecting a cautious but near-neutral economic mood.