Take two: Eurozone inflation rises; US stocks hit fresh highs
- 07 July 2025 (3 min read)
What do you need to know?
Eurozone annual inflation edged up to 2% in June - the European Central Bank’s (ECB) target - from 1.9% in May, according to an official flash estimate. It marked the first rise since January and reflected persistent underlying price pressures, particularly in the services sector, where inflation increased to 3.3% from 3.2%. Core inflation, which excludes more volatile food, energy, alcohol and tobacco prices, was unchanged at 2.3%. At last week’s ECB Forum on Central Banking in Sintra, Portugal, ECB President Christine Lagarde said policymakers will remain “vigilant” and continue to decide monetary policy on a meeting-by-meeting basis.
Around the world
Despite 2025’s uncertain backdrop, the S&P 500 and Nasdaq indices both hit fresh highs last week – and marked their best quarter in over a year - boosted by trade talk optimism and better-than-expected jobs data. The S&P 500 gained 11% over the three months to 30 June while the Nasdaq rose 18%, according to Reuters. Meanwhile the UK government bond market sold off aggressively on 2 July on the back of concerns over the potential for further fiscal deterioration and speculation that the UK Chancellor, Rachel Reeves, could be replaced. However, Prime Minister Keir Starmer asserted she will remain in office, and yields slightly eased back.
Figure in focus: 51.3
China’s business activity returned to growth in June following a rise in factory production, the final Caixin Purchasing Managers’ Index (PMI) confirmed. The composite PMI, which includes both services and manufacturing data, rose to 51.3 from 49.6 in May – a reading above 50 indicates expansion. Elsewhere, Japan’s composite PMI increased to 51.5 in June from 50.2 previously. This marks the quickest rate of expansion since February. However, the US saw a slight fall in the composite PMI, to 52.9 from 53.0, though manufacturing output returned to growth, recording its best rate of expansion since February.
Words of wisdom
Global Liveability Index: A ranking of the world’s “most liveable cities”, from the Economist Intelligence Unit which assesses living conditions in 173 locations around the world based on various indicators. It scores five different factors - stability, healthcare, education, infrastructure as well as culture and environment - to evaluate which areas offer the best and worst living conditions, to produce a rating where 1 is considered intolerable and 100 ideal. This year Denmark’s capital, Copenhagen, overtook three-time leader Vienna as the most liveable city in the world, scoring 98.0. The average score across the locations analysed was 76.1, with stability scores declining but increasing in education, healthcare and infrastructure.
What's coming up?
On Tuesday, the Reserve Bank of Australia meets to decide on monetary policy - officials cut rates by 25 basis points (bp) to 3.85% at their May meeting. China issues its latest inflation update on Wednesday, while the Federal Reserve (Fed) posts the minutes from its recent policy meeting, where it opted to leave rates on hold at 4.25%-4.50% for a fourth consecutive time. The UK publishes monthly GDP growth figures on Friday, while Canada reports unemployment data.
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