Investors are now turning their attention to Thursday’s European Central Bank policy meeting, where interest rates are widely expected to be left unchanged following June’s hike. Even so, markets are still pricing in two additional ECB rate increases by early 2027, with the first potentially arriving as soon as September.

On the corporate side, Germany’s automotive sector was in the spotlight after Tesla announced plans to rapidly expand production at its Grünheide factory near Berlin. Meanwhile, Salzgitter extended Friday’s rally after the steelmaker raised its full-year earnings guidance.

On a monthly basis, the average gross salary rebounded by 2.5% after a 3.8% decline in May. This recovery was largely driven by a higher volume of additional payments, including bonuses and awards such as quarterly, annual, incentive and discretionary payments, as well as long-service awards and pay raises.

Year-to-date, corporate sector wages have increased by 5.8%.

Output growth also picked up in electricity, gas, steam and air-conditioning supply (16.4% vs. 12.8% in May), as well as in water supply, sewerage, waste management and remediation activities (14.7% vs. 11.0%). By contrast, growth moderated in mining and quarrying, easing to 28.3% from 31.0%.

On a monthly basis, industrial production rose 2.0% in June, recovering from a 0.8% decline in May. For the first half of 2026 as a whole, industrial output was 3.9% higher than in the same period a year earlier.

Over the January–June period, exports rose 20% year-on-year to USD 3,876.3 million. Growth was driven primarily by stronger shipments of oil and petroleum products (up 974.3%), precious metal ores and concentrates (up 74.3%), and copper ores and concentrates (up 287.4%). Among major trading partners, exports increased sharply to China (143%), Armenia (27%), and Turkey (57.3%).

Imports in the first half of the year inched up 0.7% to USD 9,049.1 million, supported by higher purchases of oil and petroleum products (34.6%), medications (8.5%), and petroleum gases and other hydrocarbons (19.1%). By country, imports rose from Turkey (6.8%), Russia (25.6%), China (22.5%), and Azerbaijan (25%).

As a result, Georgia’s trade deficit for the first half of 2026 narrowed to USD 5,172.9 million, compared with USD 5,757.6 million in the corresponding period of 2025.

These pressures compound existing constraints, notably China’s 45 million-ton production cap, which is expected to become more binding this year. At the same time, inventories at LME warehouses remain near their lowest levels since 2022, while stockpiles on the Shanghai Futures Exchange continue to fall, underscoring resilient demand. Some relief may come from the restart of Emirates Global Aluminium’s Al Taweelah alumina refinery, which has resumed operations after a three-and-a-half-month outage.

Inflation decelerated in both mining and quarrying (15.3% vs. 24.6% in May) and manufacturing (5.2% vs. 6.5%), with notable slowdowns for coke and refined petroleum products (18.5% vs. 52.5%), basic metals (10.6% vs. 13.4%), chemicals and chemical products (19.1% vs. 23.7%), and food products (5.8% vs. 6.5%).

By contrast, price growth accelerated in electricity, gas, steam, and air‑conditioning supply (4.4% vs. 1.0%) and in water supply, sewerage, waste management, and remediation services (6.7% vs. 6.4%).

On a monthly basis, producer prices declined by 0.8% in June, following a flat reading in May.

There was also a sharp deceleration in activity in the electricity, gas, steam, and air-conditioning supply sector, which rose by 11.0% after surging 36.1% in April. By contrast, output in mining and quarrying accelerated, expanding 22.4% compared with 13.4% in the previous month.

On a seasonally adjusted monthly basis, industrial production rebounded by 1.9% in May, following an 11.7% contraction in April. Over the first five months of 2026 (January–May), industrial output was up 7.2% compared with the same period a year earlier.

In China, Australia’s key trading partner, the People’s Bank of China left its benchmark lending rates unchanged for a 14th straight month at the July fixing, matching expectations as authorities attempted to balance growth support with currency stability.

Energy-related stocks outperformed, with Woodside Energy rising 1.5% and Santos gaining 1.7%. South32 advanced 4.2%, while Ampol Ltd. added 1.3%. In contrast, gold miners retreated, led by Evolution Mining, down 1.8%, and Northern Star, off 0.9%. Among the major banks, two of the big four slipped between 0.2% and 0.5%.

Industry data showed that blast furnace capacity utilization at surveyed mills fell below 90% last week, while the share of profitable mills eased to around 37%.

On the trade front, recent Chinese customs data indicated that steel exports dropped 5.6% year-on-year to 57.87 million tons in the first half of the year. In June alone, exports stood at 10.32 million tons, down 0.2% from May but 6.6% higher than a year earlier. Over the same January–June period, China’s steel imports totaled 2.69 million tons, an 11.3% decline compared with the same period last year.

Brent crude surpassed $90 per barrel, the highest level in more than a month, as intensifying tensions between the United States and Iran raised the risk of disruptions to oil shipments through the Strait of Hormuz, stoking renewed inflation concerns.

Money markets now anticipate that the ECB’s deposit facility rate will reach 2.70% by December and 2.78% by February 2027, up from the current 2.25%. The first hike is expected as early as September. Investors are now focused on Thursday’s ECB policy meeting, where policymakers are widely expected to keep rates on hold and maintain a wait‑and‑see approach after June’s first rate increase in three years.

Energy prices edged 0.4% higher, supported by petroleum products, naphtha, heating oil, and motor fuels. These gains were partly offset by lower prices for natural gas and electricity, which tempered the impact of ongoing geopolitical tensions in the Middle East. Capital goods prices rose 2.1%, while durable consumer goods were up 1.8%, reflecting higher prices for machinery, furniture, and household appliances.

By contrast, non-durable consumer goods fell 2.2%, driven largely by cheaper food, especially butter and pork. Excluding energy, producer prices increased 2.4% from a year earlier.

On a monthly basis, producer prices declined 0.3%, reversing a 0.3% rise in May and registering the first month-on-month drop since February. The fall was steeper than market expectations, which had pointed to a smaller 0.2% decrease.

Sentiment was further pressured by rising oil prices following US strikes on Iran, which heightened inflation concerns and strengthened expectations of additional interest rate hikes. Losses were led primarily by electronic technology, financial, and traditional process industries.

The electronic technology sector slipped 0.6%, following a steep 7.5% plunge in the prior session. Notable decliners included Nan Ya Plastics (-6.3%), CTBC Financial (-1.0%), MediaTek (-0.9%), and Fubon Financial (-0.5%).

In contrast, TSMC—the world’s largest contract chipmaker and a heavyweight that accounts for more than 40% of the market’s total value—rose 1.3%. The stock staged a strong rebound after a 7.3% slide in the previous session, supported by the company’s expectations of robust demand for AI chips.

At the same time, rising tensions in the Middle East have driven oil prices above $90 per barrel, heightening inflationary pressures and reinforcing expectations that the Bank of England will maintain tighter policy for longer. The US and Iran have engaged in an escalating series of retaliatory strikes, with US forces launching multiple attacks on Iranian targets following the deaths of American service personnel. The longer the conflict continues, the greater the risk that elevated crude prices become embedded.

Market sentiment was cautious ahead of Tuesday’s release of Q2 inflation data, with traders wary amid elevated oil prices. Concerns over persistently high energy costs were reinforced by recent US strikes on Iran, which have heightened inflation risks and strengthened expectations of additional interest rate hikes. Supporting this view, RBNZ Chief Economist Paul Conway has recently cautioned that stubbornly high inflation could necessitate further tightening.

On the data front, New Zealand’s trade surplus narrowed sharply to NZD 0.02 billion in June from NZD 0.2 billion a year earlier, as export growth lagged behind the rise in imports.

In corporate moves, A2 Milk gained 2.4%, Auckland International Airport added 1.3%, and AFT Pharmaceuticals rose 0.5%. In contrast, Ebos Group slipped 0.8%, ANZ Group declined 0.7%, and Fisher & Paykel eased 0.6%.

Export demand remained robust, with cargo surveyors estimating that palm oil shipments for July 1–15 rose between 4% and 12.4% from the same period in June. Supply concerns also underpinned prices after the U.S. Climate Prediction Center reported that El Niño had strengthened over the past month and is expected to intensify through 2026 and persist into early 2027, heightening the risk of reduced palm oil output in the coming months.

Nonetheless, upside was limited by softer demand from top importer India, where palm oil purchases fell to a 14‑month low in June as a narrowing price discount relative to competing edible oils curbed buying interest.