Latest financial market update, July 2026

Being aware of what’s affecting financial markets can help you understand how your investments are performing.  

Markets move for many reasons. Changes in interest rates and inflation affect confidence among consumers and businesses. Political events, global tensions and company results can also push markets up or down.  

Investor sentiment plays a role too – when confidence is strong, markets often rise, and when uncertainty increases, markets can fall.

Highlights

• In June, stock markets around the world generally moved lower, led by Asia Pacific and emerging markets, due to some volatility in technology shares. The MSCI ACWI Index, which represents a range of companies from around the world, decreased in value by 1.3% across the month. 
• Bond markets saw broadly negative performance due to inflation concerns. 
• Oil prices rose, as tensions in the Middle East increased once again.

Shares

Global stock markets moved lower on concerns about technology and AI-related shares

Global share markets declined, led by Asia Pacific and emerging markets. Volatility in AI-related company shares and technology stocks generally dented investor confidence, while there was also an increase in geopolitical tensions.

In the UK, the FTSE 100 of the UK’s biggest companies, rose by 3.6%, helped by lower exposure to technology companies. UK inflation (rising prices) fell between May and June as transport costs declined, and the Bank of England again held interest rates at 3.75% in July. 

US shares saw some falls, largely down to confidence around technology companies. Inflation fell in June as the pace of energy cost increases slowed. In response, the Federal Reserve held interest rates steady. Job growth slowed and was lower than expected. In Europe, shares moved slightly lower in sterling terms, while inflation edged up slightly. The European Central Bank held its key interest rate steady. Japanese markets dropped slightly too, largely due to weakness in the technology sector.  Inflation stepped up, while the Bank of Japan kept interest rates at 1% in June.  

Bonds

Global bond markets under pressure

Bonds are loans to a government or company in exchange for regular interest payments and your money back later. When bond prices go up, yields, or the return you get from a bond, go down, and when bond prices fall, yields rise.

Bond markets had a difficult month. Although major central banks kept interest rates unchanged in July, investors remained concerned that inflation could stay higher for longer, and with stronger economic data in several regions, there’s a sense that central banks might need to raise rates again or keep them higher for longer. When this happens, bond yields tend to rise and bond prices tend to fall.

This was seen in the US, where the 10-year Treasury yield rose from 4.42% in June to 4.76% by the end of July, meaning its price fell. UK government bonds also came under pressure, partly because of energy inflation concerns and expectations for future interest rate rises, although these concerns eased a little by month-end. Emerging market government bonds also fell. Corporate bonds were weaker too, with both high yield and investment grade bonds declining over the month. 

Property

Property markets see some growth 

The FTSE EPRA Nareit Developed Index, a measure of the performance of Real Estate Investment Trusts (REITs) globally, grew by 1.3%. These investments tend to be sensitive to expectations around interest rates, which were broadly held steady during the month. Recent data suggests that parts of the UK retail property market have improved, with the return to the office trend driving demand for energy-efficient prime office property in London and other major cities.  

Outlook

The flare-up of hostilities in the Middle East and volatility in technology-related shares saw some falls in stock market performance across July. We believe this unsettled pattern may continue in the months ahead.

It supports our belief that spreading investments across different regions is important, while keeping a close watch on risks such as trade tariffs, market concentration and geopolitical tensions.