Please see below the daily update article from Brooks Macdonald, received this morning – 01/07/2026
What has happened?
Risk assets ended Q2 on a strong footing, helped by easing Middle East tensions, lower oil prices and continued enthusiasm around AI. The S&P 500 rose for a second day, led by the Mag 7 and semiconductors, although breadth was weaker beneath the surface. European equities also advanced, with the STOXX 600 reaching a fresh record high as softer inflation prints reduced pressure on the ECB. Bond markets were more mixed, with US Treasury yields rising after stronger-than-expected job openings and hawkish Fed commentary, while Brent crude remained subdued following progress in US-Iran talks.
Growth v Inflation
The key theme remains the tension between resilient growth and stubborn inflation risks. US labour demand continues to look firm, with job openings surprising to the upside, but consumer confidence, housing data and business surveys point to a more uneven economy. At the same time, the AI investment cycle remains a powerful market driver, particularly for semiconductors, with South Korean exports surging and the Philly semiconductor index posting an exceptional quarter. This combination of strong AI-led earnings momentum and uncertain macro data is keeping markets supportive but narrow.
What does Brooks Macdonald think?
The recent rally has been underpinned by a favourable mix of falling energy prices, reduced stagflation fears and resilient corporate earnings expectations. However, the narrow leadership from mega-cap technology and semiconductors suggests investors should be cautious about extrapolating headline index strength too broadly. Central banks are likely to remain data-dependent, with lower oil prices easing near-term inflation pressure in Europe, while stronger US labour data keeps the Fed debate more finely balanced. Overall, sentiment remains constructive, but markets may need broader participation and clearer evidence of disinflation to sustain momentum into H2.
Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.
Cherise Lancaster
01/07/2026