Please see below the weekly market update article from Brooks Macdonald, discussing record equity market highs, improving market breadth, easing inflation pressures, and interest rate expectations, received yesterday – 06/07/2026.
Record highs and broader participation
Last week saw equity markets extend their recent gains, with US equities rising +1.76% and European equities outperforming by gaining +2.66%. While headline indices remained supported by optimism around artificial intelligence and easing inflation pressures, a notable feature of the week was improving market breadth. In the US, the equal-weighted S&P 500 repeatedly reached fresh highs, suggesting investor appetite is beginning to broaden beyond the market’s largest technology companies. By contrast, semiconductor stocks struggled, with the Philadelphia Semiconductor Index suffering a second consecutive weekly decline, highlighting an increasing divergence beneath the surface of equity markets.
Softer data, easier rate expectations
Economic data broadly reinforced the view that growth is moderating without deteriorating sharply. US payrolls increased by 57,000 in June, below expectations, while revisions to prior months pointed to a gradual cooling in labour market momentum. Elsewhere, manufacturing surveys and private payroll data also suggested economic activity may be losing some steam. Importantly for investors, softer growth data was accompanied by easing inflation pressures, particularly in Europe where June inflation readings came in below expectations. Together, these developments encouraged markets to scale back expectations for further interest rate increases and strengthened hopes that economic growth can continue without a significant resurgence in inflation.
The week ahead
With markets increasingly focused on the outlook for interest rates, this week’s central bank communications could prove particularly important. The minutes from the latest Federal Reserve meeting will provide investors with a more detailed insight into policymakers’ thinking under the new chair Kevin Warsh, while the account of the ECB’s June meeting should help clarify the likelihood of further tightening. Any signs that central banks are becoming more comfortable with the disinflation trend would reinforce the recent easing in rate expectations, while more persistent inflation concerns could challenge the market’s increasingly optimistic outlook.
A healthier rally?
Another week of record highs for major equity indices, and the underlying market story may be becoming more balanced. Previously, returns were rather concentrated in a relatively small number of technology and AI-related companies. Recent weeks, however, have seen broader participation emerge across sectors and regions, even as some of the market’s previous leaders have paused for breath. If inflation continues to moderate and policy expectations move lower, a broader range of companies may be able to contribute to future market gains. While investors should always remain mindful of economic and geopolitical risks, the widening of market leadership could prove to be a constructive development for markets in the weeks ahead.
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Alexander James Roberts
07/07/2026