Market developments
Equities: Global equity markets closed the week on a sour note after a strong mid-week rally, driven largely by AI and semiconductor stocks, ending with rising bond yields and geopolitical disappointment. The FTSE 100 was among the hardest hit, plunging over 1.5% on Friday alone. This marks its worst single-day drop since the early weeks of the Iran war, as U.K. political uncertainty surrounding Andy Burnham’s leadership push compounded the global risk-off mood. A key catalyst for the late-week selloff was President Trump returning from China without a breakthrough on reopening the Strait of Hormuz, dashing hopes that had partly underpinned the earlier rally.
Fixed Income: Government bond markets experienced a significant global selloff, with yields surging to multi-decade highs across major economies. The U.S. 30-year Treasury yield topped 5.1%, its highest level since May 2025, while the 10-year yield broke above 4.59%, the highest intraday print since May 2025. The selloff was attributed to a combination of hotter-than-expected US inflation data, persistently elevated oil prices stoking rate-hike fears and broader fiscal concerns.
Commodities: Oil dominated the commodity narrative this week, with Brent crude climbing to $109 per barrel as the ongoing disruption to Middle East supplies from the Iran conflict intensified. The IEA warned that global oil inventories are falling at a record pace and will continue to drop for months.