Global equity markets retreated last week as resurging covid-19 cases in many parts of the world and higher than expected CPI inflation in the US dented investor sentiment. Annualised US inflation jumped to 5.4% in May, the largest increase since August 2008 with the sharp rise in used car prices continuing to have a considerable impact. That led to increased speculation that the Federal Reserve may be forced to tighten policy despite the recent rhetoric from Fed Chairman Jerome Powell. Last Thursday, Powell once again reiterated the view that the current spike in inflation is just transitory although he acknowledged that is has been larger than expected.
In Europe, bourses declined with the more transmissible delta variant of the covid-19 virus now starting to gain traction in many countries around the region. The French CAC40 fell by -1.1% whilst in Germany, the DAX30 closed the week -1.0% lower. Having reached yet another intraday high earlier the week, US markets also pulled back with the S&P500 posting a weekly decline of -1.0%. Meanwhile in the UK, both large and mid-cap companies retreated sharply, the FTSE100 by -1.6% and the FTSE250 by -1.9%. One index that did record a weekly gain was the Nikkei 225 in Japan which rose by +0.2% despite Tokyo being placed under its fourth state of emergency.
Continuing the trend discussed last time, sovereign bond yields remained on the retreat as investors sought less risky assets. The US 10-year treasury yield fell by 6 basis points (bps) to 1.30% whilst in the UK, the equivalent duration gilt yield fell by 3bps to 0.63%. On the Continent, the 10-year Eurozone benchmark index matched the decline seen in the US 10-year to close the week at -0.38%.
In the commodity markets, oil prices declined ahead of an expected output hike from OPEC and its partners. Brent crude dropped to $73.67 a barrel, a -2.6% with OPEC eventually agreeing over the weekend to increase production to help stabilise the market. Elsewhere, copper also fell with the metal falling by -1.0% to $9,391 a tonne whilst gold inched higher to $1,812 an ounce, a +0.2% weekly increase thanks in part to some weakness in the US Dollar.
Housing sector data are amongst the standout figures due in the US this week with building permits, housing starts and existing home sales all due before the close of play on Thursday. In the UK flash PMI readings for July will provide an early insight into how the manufacturing and services sectors have performed so far this month with retail sales data also due on Friday morning. The government’s finances also come back into focus with Wednesday’s public sector borrowing figures.
Flash PMI data are also published in the Eurozone this week whilst the European Central Bank hosts its monthly policy meeting on Thursday with no changes expected to be made to interest rates. In Japan, the minutes from the Bank of Japan’s last policy meeting are published although headline data is in short supply this week with core-CPI the only figure of note. There are no major macro figures due from China on this occasion. 
Read last week's market update
 U.S Bureau of Labor Statistics - 13.07.21
 T. Rowe Price - 16.07.21
 OPEC - 18.07.21
 Forex Factory - 18.07.21
The value of an investment may fall as well as rise. You may get back less than the amount invested.
The value of investments may fall as well as rise purely on account of exchange rate fluctuations.
Past performance is not indicative of future performance.
Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). © LSE Group 2021. FTSE Russell is a trading name of certain of the LSE Group companies. “FTSE Russell®” is a trade mark of the relevant LSE Group companies and is used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company’s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.
© S&P Dow Jones LLC 2021. All rights reserved.
The information contained does not constitute investment advice. It is not intended to state, indicate or imply that current or past results are indicative of future results or expectations.
Full advice should be taken to evaluate the risks, consequences and suitability of any prospective investment. Opinions provided are subject to change in the future as they may be influenced by changes in regulation or market conditions. Where the opinions of third parties are offered, these may not necessarily reflect those of Rowan Dartington.
Rowan Dartington is part of the St. James’s Place Wealth Management Group. Rowan Dartington & Co. Limited is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales No. 02752304 at St. James’s Place House, 1 Tetbury Road, Cirencester, England, GL7 1FP, United Kingdom.