Among banks, HSBC declined about 1.7%, while Lloyds and Barclays lost between 0.7% and 0.8%. In healthcare, AstraZeneca dropped 1.8% and GSK fell 1.2%. Consumer staples were also weaker, with Unilever and BAT each down roughly 1.4%.

Utilities were among the worst performers. National Grid and Severn Trent both slipped more than 3%, and Centrica and SSE also traded lower after SSE warned it is unlikely to meet its 2030 renewable energy target.

By contrast, energy and defence names provided some support to the index. Shell and BP posted modest gains, while defence stocks rallied: Rolls-Royce rose around 1.5%, BAE Systems advanced more than 3%, and Babcock gained about 5%.

The incremental rise in the short-term government borrowing cost suggests a modest firming in very short-dated yields, which are often closely watched as a barometer of near-term interest rate expectations and liquidity conditions. While the move is small, investors tracking money market rates and Treasury bill auctions may view the higher stop-out yield as a sign of slightly stronger compensation required by the market to hold ultra-short U.S. government debt.

While the move is small, the gradual rise from the prior auction highlights ongoing sensitivity in the very short end of the yield curve, an area closely watched by money market participants and liquidity-focused investors. With the 4-week bill serving as a key reference for cash management and short-term investment strategies, even slight shifts in the auction stop rate can influence demand dynamics and portfolio positioning in Treasury markets.

Both the prior and current readings relate to the same second-quarter 2026 period, underscoring that the shift reflects a revision in the model’s assessment rather than a change in the reference quarter. While still pointing to solid expansion, the lower estimate suggests that more recent incoming data have led the model to scale back its earlier optimism about the pace of U.S. growth. Investors and analysts will be watching subsequent GDPNow updates closely for further revisions as additional economic indicators are incorporated into the forecast.

The improved prospects for energy supply led to a partial reversal of the recent rebound in energy prices, easing inflation concerns even as new data confirmed a renewed rise in price pressures. PCE inflation accelerated to 3.8% in April, its highest level in three years, while consumer spending remained relatively strong and initial jobless claims stayed low.

At the same time, hawkish commentary from Federal Open Market Committee officials limited further declines in Treasury yields. Fed Vice Chair Jefferson cautioned that inflation risks remain skewed to the upside, and Minneapolis Fed President Kashkari emphasized that consumer prices are still “much too high.”

Despite this tentative progress, geopolitical tensions remain elevated, with ongoing US–Iran exchanges and renewed Israeli strikes on Hezbollah positions in Lebanon, even under a fragile ceasefire. The subsequent pullback in oil prices helped alleviate some inflation worries, leading investors to trim expectations for additional Bank of England rate hikes. Market sentiment was further shaped by recent UK data indicating a cooling labor market, weaker-than-expected inflation, and signs of moderating economic activity.

According to new reports, Washington and Tehran agreed to a 60‑day memorandum extending the ceasefire and outlining a phased resumption of energy exports from the Persian Gulf. Treasury yields declined as energy prices surrendered part of their recent rebound, even as incoming economic data continued to support a hawkish stance from the Federal Reserve. Weekly jobless claims and consumer spending remained solid, while core PCE inflation climbed to its highest level in three years.

In equity markets, AI software and infrastructure leaders rallied sharply, with Microsoft, Oracle, and Palantir each advancing about 3%–4%. By contrast, semiconductor stocks weakened, led by a 1% drop in Nvidia. Snowflake soared 30% on an upbeat outlook, though the strength did not translate to the broader software sector, where Salesforce slipped 2% following its earnings release.

Axios reported that US and Iranian negotiators have reached a tentative 60-day memorandum of understanding to extend the ceasefire and open talks on Iran’s nuclear program, though the agreement still requires final approval from President Trump. While this development offered some support to broader markets, overall geopolitical tensions remain high.

At the same time, investors digested the latest minutes from the European Central Bank, which showed that several policymakers viewed the April decision to leave interest rates unchanged as a narrow one. Some indicated they would have backed a rate increase had it been formally proposed. Money markets are now almost fully pricing in a 25-basis-point hike at the June 11 meeting, with at least one additional increase anticipated by year-end.

Earlier in the session, oil prices had climbed about 2% after the US announced it had destroyed several attack drones near Hormuz, while Kuwait reported intercepting a missile fired toward its territory. In addition, Iran’s Revolutionary Guard stated that several vessels had attempted to enter the Persian Gulf without authorization, warning that it would respond forcefully to any disruption in the strategic waterway.

At the same time, bullion is hovering near a two-month low, pressured by higher energy prices that are stoking inflation fears and dampening expectations for imminent interest rate cuts. Federal Reserve officials have adopted a cautious stance: Governor Lisa Cook endorsed keeping rates on hold for now while leaving the door open to further hikes if inflation reaccelerates, and New York Fed President John Williams warned that inflation could soon approach 4% on a headline basis and 3% for core measures.

While both data points reflect continued stockpiling ahead of peak summer demand, the pullback from 101B to 92B suggests a slight tightening in the balance between supply and consumption. Market participants will be watching subsequent reports closely to assess whether this deceleration in storage growth signals shifting fundamentals in U.S. natural gas supply or emerging changes in demand patterns.

On the domestic front, the IGP-M rose 0.84% in May, slightly above market forecasts, while Citi revised its year-end Selic projection to 13.75% from 13.25%. At the same time, the national unemployment rate stood at 5.8% in the moving quarter through April, below expectations and the lowest level on record for the period.

As a result, rate-sensitive stocks weighed on the index: Itaú fell more than 1%, and Bradesco declined nearly 1%. Vale lost over 0.5% amid lower iron ore prices, whereas Petrobras gained 0.4% supported by the rise in oil prices.

Regionally, sales fell sharply in the South (-9.8% to 370,000), the Midwest (-25% to 66,000), and the Northeast (-12.9% to 27,000), while they rose in the West (18.7% to 159,000).

The stock of new homes for sale reached 489,000 units, representing 9.4 months of supply at the current sales pace. The median sales price stood at $422,500.

This decline in the Dallas Fed PCE suggests that core price dynamics may be gradually moving closer to levels more consistent with medium‑term inflation objectives. Market participants and policymakers typically monitor this gauge as it strips out the most volatile components of personal consumption expenditures, offering a clearer view of trend inflation.

The April slowdown from March’s 2.90% could influence expectations around the future path of monetary policy, as investors assess whether a sustained move toward lower underlying inflation will give the Federal Reserve more flexibility in its stance.

The data show that April’s downturn followed a robust March performance, when new home sales had accelerated compared with February. On a month-over-month basis, the comparison framework indicates that the “Actual” figure reflects April’s change versus March, while the “Previous” figure captures March’s change relative to February.

The swing from a 7.4% gain in March to a 6.2% decline in April suggests that underlying demand for new homes may be encountering headwinds after a brief upswing, with market participants likely to watch upcoming releases closely for signs of whether this is a temporary setback or the start of a broader cooling trend in new home activity.

The pullback suggests buyers may be growing more cautious, potentially in response to financing conditions or affordability constraints, after February’s higher reading. While the level of sales remains relatively solid in historical terms, the decline from 663K to 622K indicates some loss of momentum in the new housing market as the spring selling season progresses.

Investors and policymakers will be watching upcoming releases to see whether April’s slowdown proves temporary or marks the beginning of a more sustained moderation in U.S. housing activity. For now, the data signal a market that is still active but no longer accelerating at the pace observed earlier in 2026.