Market Review 15th June 2026

Everything you need to know, Simplified!

Space X: What the biggest IPO in history says about markets today

Summary

• SpaceX’s record US$75bn stock market listing, known as an IPO, highlights strong risk appetite and the premium attached to frontier technology companies, reinforcing public markets as a viable destination for large-scale capital

• Equities recovered into the weekend after a softer start to June, with retail participation signalling a continued willingness to pay up for innovation-led growth

• Hopes of an Iran deal supported cyclicals and pushed oil lower, while bonds rallied, particularly in the UK, as inflation concerns eased - reports emerged on Sunday evening that a peace agreement had been reached

• The European Central Bank (ECB) has begun tightening into a weak growth backdrop, raising rates while signalling concern over energy-driven inflation but limited evidence of second-round effects

• The US Federal Reserve (Fed) is expected to hold rates, but a more hawkish (favouring higher interest rates) tone is likely as inflation remains sticky, with Chair Warsh potentially signalling a shift away from prior easing bias

• The Bank of England (BoE) is likely to remain on hold, balancing weak domestic growth against persistent inflation

• The Bank of Japan (BoJ) is expected to continue gradual normalisation with a modest rate hike, supporting yen stability and avoiding disruption to crowded carry trades.

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Market Review

Escape velocity: markets react to the biggest IPO in history

SpaceX blasted off on Friday, raising US$75bn at a valuation of c.US$1.8tn. This commentary can only address matters at a macro level and, in that context, what matters is what this tells us about risk appetite, the health of public equity markets as a destination for capital, and the extraordinary premium investors are willing to assign to businesses at the forefront of technological innovation.

Equity markets have so far lost ground in June following an incredible spring rally. Last week followed a similar pattern, before sentiment turned sharply into the weekend as the largest IPO in history coincided with a notable rebound. Technology-related stocks supported the bounce. The deal went off without a hitch supported by strong retail participation. That retail enthusiasm speaks to a broader willingness to pay-up for exposure to transformative assets even in a month where broader indices have struggled. From this angle risk appetite remains firmly open.

For much of the past decade companies have chosen to stay private for longer including many consequential technology companies. Last week was a reminder of what public markets can offer that private capital cannot: price discovery, liquidity, and broad participation. This deal marks the beginning of a handful of high-profile listings for large technology businesses and sets an encouraging tone for the markets ability to absorb such events. 

The IPO also provides a fresh insight into how markets are pricing frontier technology and are assigning substantial premiums to businesses operating at the edge of what is technically possible. While this is fine in a rising market and where the economic backdrop remains supportive it leaves little margin of safety in a downturn. 

Markets buoyed by hopes of Iran deal

There were renewed hopes for an imminent peace agreement after President Trump indicated that a deal would be signed by the end of the week and stipulated that the Strait of Hormuz would instantly reopen. This added rocket fuel to equities with cyclical sectors such as materials, real estate and industrials driving the market higher. Oil prices fell by a little over 6% across the week, with Brent closing at US$87/bbl. Bonds ended the week on strong footing too particularly in the UK with short-dated yields falling sharply as inflation fears ebbed. The 2-year gilt yield fell 0.14% to close at 4.23%.

On Sunday evening, on President Trump’s 80th birthday, a memorandum of understanding indeed appears to have been signed. It is still early stages, and the deal is likely fragile, but both parties have reportedly agreed to lift their blockades this Friday. Oil is lower again this morning with equities and bonds extending gains.

ECB hikes into slowdown

In the eurozone, the ECB raised rates by 25bps to 2.25% as expected, while revising inflation forecasts higher and growth lower. The decision reflects the inflationary impulse from higher energy prices, but the growth backdrop is undisputedly weak. 

There is little evidence of second-round inflation effects; wage growth remains contained and medium-term inflation expectations are well anchored, suggesting that underlying inflationary pressures are not accelerating in a way that would justify a sustained tightening cycle. 

Further hikes would weigh on European assets and could end up ultimately proving supportive of bonds. A pause after this initial move would allow risk assets time to adjust, while still anchoring inflation expectations. The market currently sees the ECB hiking once more this year with another likely in 2027. If the ECB hikes too quickly we would expect cuts next year, this seems unlikely now given the peace deal.

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The week ahead

Fed rate decision

This Wednesday’s decision will be the first test for Chairman Kevin Warsh, who watches over an economy facing clear upward price pressures while the President continues to push for lower interest rates. While we think it is unlikely that the Fed will raise rates this week, the discussion within the Federal Open Market Committee (FOMC) will have shifted more hawkish. Warsh could look to assert his independence by abandoning Powell’s easing bias.

US CPI (a measure of inflation that tracks the changes in the average prices paid by consumers for a basket of goods and services over time) rose 4.2% year-on-year in May, in line with expectations at the headline level, with core inflation slightly softer at 2.9%. Much of the persistence in core inflation continues to be driven by shelter, and in particular the owners’ equivalent rent (OER) component, which is a lagging and somewhat imputed measure of housing costs rather than a real-time reflection of market rents. Strip this out and underlying inflation looks materially closer to target (with core CPI ex-shelter nearer 2.4%), but even so it remains above pre-pandemic levels, and underlying price pressures have not fully normalised.

BoE rate decision 

The BoE is not expected to hike this Thursday with the swap market pricing in only a 4% probability of a move. Like the ECB, the BoE must weigh a weak growth environment against stubborn price pressures, but unlike the ECB it faces a more fragile domestic fiscal setting and a gilt (UK government bonds) market that remains sensitive to policy credibility. Recent weak data and the Iran deal gives Governor Bailey grounds to ‘wait and see’.

BoJ rate decision

The Bank of Japan is likely to raise its policy rate to 1.0% from 0.75%, continuing its glacial journey to normalise policy. The BoJ will likely tighten this week given their tightening labour market in combination with the global inflationary backdrop; higher energy prices and rising rates across other major central banks.

That gradual normalisation supports a steady appreciation of the Japanese yen, which remains heavily shorted by investors using it to fund carry trades (borrowing in a low-yielding currency such as the yen to invest in higher-yielding markets such as Brazil). When global rates are simultaneously rising, the yield gap is not materially lower when the BoJ hikes.

Given how crowded the yen carry trade is, any sharper or unexpected shift in policy or yield differentials could trigger a disorderly move in the currency - we saw this in the Autumn of 2024 when the Fed cut by 0.5% on the back of softening labour market data caused the yen to surge. We do not expect any surprises from the BoJ this week. 

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