The latest economic news and market highlights from the UK and abroad.
This week's headlines:
- US and Iran agree historic peace deal – on Wednesday night, the US and Iran confirmed a historic 14-point agreement to end the war and reopen the Strait of Hormuz. The deal stipulates that Iran can never own a nuclear weapon, while the US promises to remove sanctions. A $300bn reconstruction fund will also be established, although the US won’t contribute directly. The US has also dropped its naval blockade.
- UK inflation steady – inflation remained at 2.8% in the year to May. Experts had expected 3%, with the war in Iran driving further increases over the coming months. Transport costs continued to rise by the fastest rate, but price increases for dairy, meat, and vegetables eased.
- UK interest rates held at 3.75% – the US-Iran peace agreement eased fears of further price rises. This led the Bank of England (BoE) to keep the benchmark rate unchanged for the fourth meeting in a row.
- US holds rates – this US Federal Reserve (Fed) also chose to hold rates after Kevin Warsh’s first meeting in charge. Governors were split on whether to hold rates steady or increase them to hold off inflation, which is currently at 3.8%. There’s potential for rate increases in the future.
- Japan raises interest rates to highest level in three decades – the Bank of Japan (BoJ) decided to increase interest rates to 1% on Tuesday, the highest since 1995. After decades of ultra-low rates, Japan has been gradually tightening policy since March 2024. It’s current inflation rate of 1.4% sits below its 2% target. It’s seen as a move to stabilise the yen which has come under pressure from a stronger US dollar.
What this means for financial advisers and clients
The news this week is broadly positive. Peace is on the horizon, oil prices have come right down, England and Scotland won their opening games in the World Cup.
We can see the impact in the UK and US where central banks chose to hold interest rates steady for now. But we’re not out of the woods yet.
While the US and Iran have committed to peace, it’s a shaky one. And it relies on Israel withdrawing from Lebanon, which they’ve not yet agreed. On Friday morning, they announced that the peace talks were postponed indefinitely.
Even with peace, it’s unclear when oil will start flowing more freely without risk of interruption. And it may take time for increased energy costs for UK households and businesses to come down. The Ofgem price cap for example is due to rise by 13% in July, and it typically takes a few weeks for oil prices to be reflected on the forecourts. There could be further interest rate rises on the cards for the UK and the US.
Are central banks cutting or hiking?
Source: HSBC Asset Management
Why’s this worth sharing?
In a week of central bank announcements, it’s worth looking at the trend central banks are taking around the world.
We’ve seen inflationary shock from the war in Iran, and we've also seen a boom from the surge in AI-related investment. This has forced banks to take action on inflation.
From before the war where we saw rate cuts, we’ve now moved into a period where some banks are raising rates, but some are still holding to see what move needs to come next.
The key question is whether this is just a blip on the radar or if we’re going to see a period of more rate rises? For many countries it could hinge on how much oil can start flowing through the Strait of Hormuz.
The Markets
UK
Both the FTSE 100 and 250 showed modest gains while gilt yields didn’t change much over the course of the week.
US
The NASDAQ saw growth while the S&P 500 saw a small decline. This week saw SpaceX – which isn’t part of either index – gain in price to above $225 and becoming one of the world’s top five largest companies on Tuesday. However, the company then lost more than $620bn in valuation over the next few days.
Oil
With the announcement of a potential peace agreement the price of oil has dropped.
Gold
Normally seen as a safe haven asset, gold has seen a decline this week. This was on the back of future potential future interest rate rises from the Fed.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | 0.69% | 6.56% |
| FTSE 250 | 0.33% | 5.66% |
| S&P 500 | -0.33% | 11.66% |
| NASDAQ | -0.95% | 22.63% |
| FTSE Developed Europe ex UK | 1.99% | 9.38% |
| FTSE Emerging | 0.53% | 13.33% |
| FTSE Japan | 1.38% | 15.89% |
| Brent Crude | -3.38% | -1.43% |
| Gold Spot | -2.52% | -2.18% |
| UK 10yr Gilt yield | +1bps | +37bps |
| US 10yr Treasury yield | +1bps | +32bps |
Source: Morningstar, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 18th June 2026.
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This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
