With relatively few major macroeconomic developments to drive markets this week, investors refocused on AI and big tech, providing fresh momentum for U.S. equities. Renewed buying interest in large-cap technology and semiconductor stocks helped push the Nasdaq and S&P 500 higher, underscoring continued confidence in companies expected to benefit from continuing adoption of artificial intelligence.
India trade relations were also in focus this week. Investor sentiment was supported by reports that the India–U.S. trade agreement is in its final stages, with U.S. officials signalling that negotiations are close to completion. The agreement is expected to deepen bilateral trade, improve market access and strengthen investment flows, while reinforcing cooperation in strategic sectors such as manufacturing, technology, and supply chains. Indian officials also identified AI, semiconductors, and biotechnology as key pillars of the next phase of their strategic cooperation. Separately, Prime Minister Modi is soon set to meet Japan’s Prime Minister Takaichi to advance collaboration in technology, energy, investment, and economic security. The discussions are expected to support greater Japanese investment in India, enhance collaboration in semiconductors and advanced manufacturing, and reinforce supply chain resilience as both countries seek to diversify away from China.
The U.S. and Iran reached an agreement on Sunday to halt attacks and allow commercial ships to move freely through the Strait of Hormuz, easing tensions after a weekend of military exchanges that threatened to derail peace efforts. President Donald Trump said both sides are preparing for new talks in Qatar on Tuesday, though Iran has yet to comment publicly.
Meanwhile, Japan’s labour market continues to present a mixed picture for investors. The unemployment rate remained unchanged at 2.5% in May, while the number of unemployed declined and employment increased, pointing to continued resilience in the labour market. However, the jobs-to-applicants ratio held steady at 1.17, indicating that labour market conditions remain tight despite signs of gradual normalisation.
The FTSE 100 finished Tuesday up just 0.12%, easing back from earlier highs. Defence stocks – Babcock, Melrose, Rolls‑Royce, and BAE Systems – jumped after the government announced a £15bn boost to defence spending as part of a new 10‑year strategy, funded through reprioritisation and efficiency savings rather than additional borrowing. Looking ahead, Keir Starmer has urged his likely successor, Andy Burnham, to maintain strong defence commitments without relying on debt‑funded expansion, and markets will be watching closely to see whether Burnham can balance higher investment with fiscal discipline to preserve confidence in the UK’s public finances.
Mining stocks also performed well during the week as industrial metal prices rose on the back of better-than-expected economic data from China, showing that the region enjoyed renewed growth momentum in June.
Still to come this week we have Eurozone inflation U.S. jobs data and a closure of U.S. markets on Friday in observance of the Independence holiday.
Nicola Tune, Portfolio Specialist