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17 June 2026

US stocks traded mixed on Tuesday, with losses in AI-related semiconductor and energy stocks offset gains in financials and some rate- and/or oil-sensitive sectors. The S&P 500 was down 0.6%.

US Treasuries rose on lower oil prices and after a solid 20-year Treasury debt auction. 10-year yields fell 3bp to 4.44%.

European stocks rose on Tuesday amid easing geopolitical tensions. The Euro Stoxx 50 gained 0.4%. The German DAX was up 0.1% and the French CAC closed 0.8% higher. In the UK, the FTSE 100 rose 0.6%.

European government bonds rose. 10-year German bund yields fell 2bp to 2.93% and 10-year French bond yields dropped 4bp to 3.66%. In the UK, 10-year gilt yields fell 2bp to 4.79%.

Asian stock markets traded mixed but mostly higher on Tuesday, as investors monitored major central banks’ rate decisions this week and awaited further details on a US–Iran deal to reopen the Strait of Hormuz. Japan’s Nikkei 225 edged up 0.1%, while Korea’s Kospi climbed 2.1%. India’s Sensex also gained 0.7%. Chinese equities lagged, with China’s Shanghai Composite and Hong Kong’s Hang Seng down 0.1% and 1.4%, respectively.

Crude oil prices extended declines on Tuesday. WTI crude for July delivery dropped 5.8% to settle at USD76.1 a barrel.

The Bank of Japan (BoJ) raised its policy rate by 25bp to 1.00%, as widely expected, and decided to halt the reduction in JGB purchases from April 2027. The BoJ highlighted the risk of underlying CPI inflation deviating upward above 2%.

The Reserve Bank of Australia (RBA) kept its policy rate unchanged at 4.35%, as widely anticipated. Governor Bullock noted upside risks to inflation and did not rule out further tightening.

In China, May activity indicators continued to reflect a two-speed economy. Industrial production showed resilience, up 4.5% yoy, driven mainly by gains in high-tech manufacturing and new energy sectors thanks to robust exports. However, non-tech domestic demand was softer than expected as the property sector remained under pressure. Retail sales fell 0.6% yoy, partly reflecting an unfavourable base effect from last year’s trade-in subsidies. Fixed asset investment contracted by 4.1% yoy in the first five months, despite strong advanced manufacturing investment.

In the US, the Federal Reserve’s new Chair Warsh is likely to adopt a wait and see stance, keeping the rate target at 3.50-3.75%, while the dot plot rate projection should show no rate cuts in 2026. Another modest rise in retail sales is envisaged in May though weaker real income growth is a drag on consumer spending.

Brazil’s central bank is expected to lower its policy rate by 25bp, with the risk that recent disappointing inflation data keeps policy on hold.

In the UK, headline inflation should rise on unfavourable base effects. Core services inflation has softened recently.