The data indicate that consumers are more optimistic about both their household finances and the broader economic outlook. The share of respondents expecting “good economic times” over the next 12 months rose to 31.3%, compared with 21.1% in May. Likewise, the proportion anticipating an improvement in the national economy increased to 22.5% from 16.8%.

Households also reported a stronger perception of their current financial situation. The net balance of respondents stating that their household’s financial condition was better than a year earlier widened to 11.5% from 3.1%. In addition, willingness to purchase durable goods surged to 16.1%, up from 5.8%.

In the banking sector, Itaú fell 1.4%, Bradesco dropped 0.6%, and both Itaúsa and Banco do Brasil declined 1.3%. In contrast, Petrobras advanced 2.5%. Utilities delivered a mixed performance: Axia gained 0.9%, while Sabesp slipped 0.3%. Steelmakers also traded mixed after the US announced a new 25% tariff on Brazilian steel imports. CSN lost 1.0%, whereas Gerdau rose 0.5%.

On the macroeconomic front, the IBC-Br economic activity index edged up 0.1% month-over-month in May 2026, slowing from a 0.5% increase in April but slightly beating expectations for no change.

At the same time, escalating clashes between the US and Iran in the Gulf, following the breakdown of a truce, disrupted oil flows through the Strait of Hormuz. The resulting rise in oil prices reignited inflation concerns and weighed on financials and the broader equity market. BMO and Scotiabank each slipped 0.5%, while Brookfield retreated 1.7%.

Energy stocks moved in the opposite direction, benefiting from higher crude prices. Canadian Natural advanced 2.0%, and Suncor gained 2.6%.

At the same time, inflation fears intensified as the conflict in the Middle East persisted and fuel prices continued to rise. Economic headwinds were compounded after US President Trump alleged that China interfered in the 2020 US presidential election, casting doubt on the durability of the trade truce that followed last year’s tariff dispute. On the corporate earnings front, Netflix tumbled 7.3% after projecting another quarter of slowing revenue growth.

In the US, a relatively light data calendar will be dominated by forward-looking indicators, notably the S&P PMIs, the Conference Board’s Leading Economic Index, and a series of regional Federal Reserve surveys. In Europe, the ECB will announce its latest policy decision, accompanied by a run of confidence and sentiment gauges. The UK will release key macro data, including inflation figures, the unemployment rate, and retail sales.

In Asia, Japan is scheduled to publish its trade balance and CPI data. Elsewhere, South Korea will report its Q2 GDP, while Canada will release its latest consumer inflation numbers. On the political front, Labour Party leader Andy Burnham is expected to take office as the next UK Prime Minister.

AI-linked companies sold off worldwide amid persistent concerns that major AI hyperscalers are poised to slow their infrastructure spending. Sentiment was further hit by the launch of powerful new large language models from Chinese firm Moonshot, which raised fears of a shift in demand away from Western technology providers. ASML dropped 3.9%, and Siemens slid 2.3%.

At the same time, rising natural gas prices, seen as pro-inflationary, weighed on credit prospects and equity valuations for leading European banks. BBVA and Deutsche Bank both fell by about 2.5%. UniCredit also lost 2.5% after the German government indicated a degree of openness to discussing acquisition terms with the Italian lender regarding its potential bid for the state’s stake in Commerzbank.

Among utilities, National Grid climbed 3.3%, Severn Trent 3%, United Utilities 2.4%, and SSE 2.4%. Tobacco groups also advanced, with BAT up 2.7% and Imperial Brands 2.3%. Energy majors moved higher in tandem with rising oil prices, as Shell gained 2% and BP added 0.7%.

On the downside, Burberry slumped 6.4% to the bottom of the index after its second-quarter earnings marginally missed forecasts, and the company cautioned that the conflict in the Middle East could weigh on future demand.

In politics, Andy Burnham was confirmed as Labour leader and is set to become prime minister on July 20. Investors are closely watching his cabinet selections, including the widely expected appointment of current Home Secretary Shabana Mahmood as chancellor. For the week as a whole, the FTSE 100 advanced around 1%.

On the monetary policy front, FOMC officials continued to indicate that persistently elevated core inflation may justify another interest rate increase this year, a stance supported by robust retail sales data and low levels of unemployment claims. These hawkish signals persisted despite soft June inflation figures and a second consecutive decline in inflation expectations, as reported by the University of Michigan consumer sentiment survey.

Fixed-income markets also found support in renewed geopolitical tensions after US President Trump alleged that China interfered in the 2020 US presidential election, raising concerns about the fragile truce that followed last year’s tit-for-tat tariff hikes. At the same time, upside inflation risks persisted as commercial shipping continued to avoid the Strait of Hormuz amid fresh clashes between Iran and the United States.

Interest-rate futures showed more than two-thirds of market participants anticipating at least one Federal Reserve rate hike by year-end, even though policymakers are widely expected to leave rates unchanged at this month’s meeting.

All five components of the index strengthened, led by roughly 20% improvements in assessments of buying conditions for durable goods and expectations for business conditions over the coming year. The rebound was broad-based across age, income, wealth, and political groups, with especially pronounced gains among consumers without a bachelor’s degree.

Even so, overall sentiment remains 12% below its level of a year earlier, as elevated prices continue to pressure household finances. One-year inflation expectations edged down to 4.2% from 4.6%, while long-run expectations were unchanged at 3.3%. The majority of survey responses were collected before the resumption of U.S. strikes against Iran on July 7 and the subsequent increase in gasoline prices.

At the same time, the United States and Iran stepped up attacks across the Gulf, and the breakdown of their truce disrupted oil flows through the Strait of Hormuz. The conflict drove oil prices higher, fueling inflation concerns and weighing on financials and the broader equity market. Major banks—including RBC, TD Bank, BMO, and Scotiabank—each fell by about 1%.

Gold prices also edged lower and were on track for a weekly decline, adding further pressure to mining shares. Agnico Eagle lost more than 1%, while Barrick and WPM each dropped nearly 2%.

Additional reports suggested that Iran ordered Houthi forces to prepare to disrupt shipping in the Red Sea if the US were to target Iranian power infrastructure. Meanwhile, commercial traffic through the Strait of Hormuz has remained largely constrained. Oil prices are up more than 10% this week as escalating hostilities heighten fears of a wider regional conflict. Earlier in the week, the US reinstated a naval blockade on Iranian ports near the Strait of Hormuz.

Semiconductor stocks tumbled on fears that major AI “hyperscalers” will scale back investment in AI infrastructure, unwinding much of this year’s rally. Concerns over lower capital expenditures were compounded by rapid improvements in Chinese AI models, including the latest release from Kimi. Micron and Intel each fell more than 4%, while Nvidia slipped 2%.

At the same time, pro-inflationary pressures intensified as the war in the Middle East persisted and fuel prices rose. Additional economic risks emerged after US President Trump alleged that China interfered in the 2020 US presidential election, threatening the fragile truce that followed last year’s tariff-related disputes between the two countries.

On the earnings front, Netflix sank 11% after projecting another quarter of slowing revenue growth.

Among major banks, Bradesco fell more than 0.5%, while Itaú and Itaúsa also ticked lower. Vale extended its decline, losing nearly 1% after the US announced a new 25% tariff on Brazilian imports. Other notable underperformers included Axia (-0.4%) and Rede D'Or (-0.5%). In contrast, Petrobras gained nearly 2%, supported by the rise in oil prices.

Geopolitical risks intensified after Tehran launched new strikes on US facilities in the Middle East, following a sixth straight night of US attacks on Iranian military targets that continued to disrupt shipping through the Strait of Hormuz.

Fed officials added to the hawkish tone. Dallas Fed President Lorie Logan called for an additional rate increase, while Fed Vice Chair Philip Jefferson said he would support tighter policy if inflation fails to show near-term improvement. Futures markets now imply roughly a 50% probability of a rate hike in September.

On the economic data front, both US consumer and producer prices declined in June, largely reflecting lower energy costs, while import prices unexpectedly rose.

Despite the sizable equity outflows, foreign investors remained net buyers of Canadian securities for a fifth consecutive month, supported by strong demand for fixed-income instruments. Purchases included C$7.8 billion in federal government bonds and C$7.1 billion in provincial government bonds.

Foreign holdings of Canadian money market instruments also rose by C$6.0 billion, the largest increase since September 2025, driven mainly by acquisitions of private corporate paper (C$3.7 billion) and paper issued by federal government business enterprises (C$2.8 billion).

By category, permits for buildings with five or more units declined 4.9% to 445,000, while single-family permits fell 2.4% to 871,000.

Regionally, permits dropped in the South (down 7.2% to 707,000) and the West (down 6.2% to 302,000), but increased in the Northeast (up 15.8% to 154,000) and the Midwest (up 5.7% to 204,000).

By category, multi-family starts soared 76.3% to 513 thousand units, rebounding sharply after a 41% plunge in the previous month. In contrast, single-family starts slipped 0.2% to 895 thousand units, marking a third consecutive monthly decline.

Regionally, housing starts rose across all four major US regions: the South increased 15.2% to 741 thousand units, the Midwest jumped 33.3% to 248 thousand, the Northeast advanced 10.3% to 129 thousand, and the West climbed 22.1% to 309 thousand.