Investment market update: June 2026

According to the Organisation for Economic Co-operation and Development (OECD), a global recession could occur if the conflict in Iran continued into 2027 (3 June 2026). The organisation warned that delays in agreeing a peace deal would affect global growth and cause energy shortages.

Indeed, the OECD said in a scenario where the conflict continues into 2027, global GDP could fall to 2.1% in 2026, compared to 3.4% in 2025.

Markets experienced volatility but recovered throughout June 2026

On 3 June, European markets opened in the red (the Guardian, 3 June 2026). US President Donald Trump threatened tariffs of between 10% and 12.5% on 60 countries, including the UK, the EU, and Australia, over allegations of forced labour. However, having seen similar tactics before, markets reacted more subtly than they have in the past. 

The UK index, the FTSE 100, was up 0.13% when markets opened on 4 June, thanks to news of a ceasefire in the Middle East (the Guardian, 4 June 2026). However, this was short-lived as technology valuations slipped, leading to the index falling 0.46%.

The fall continued into the following day, with South Korea’s main index, the KOSPI, dropping 5% (the Guardian, 5 June 2026).

Renewed conflict in the Middle East hit markets on 8 June. The KOSPI fell more than 9%, triggering a circuit break, which halted trading for 20 minutes (the Guardian, 8 June 2026). Similarly, Japan’s Nikkei 225 (-3.8%), the US S&P 500 (-2.64%), and markets across Europe fell as AI and technology valuations dipped. 

Markets did bounce back on 9 June, including the KOSPI rising 8.4%, which could suggest the drop was a blip rather than an AI market crash (the Guardian, 9 June 2026). 

Despite hopes of a ceasefire earlier in the month, the US and Iran exchanged fire on 10 June. This led to volatility in Asian markets and European markets remaining flat as they opened (the Guardian, 10 June 2026). 

On 12 June, SpaceX raised $75 billion (£56.8 billion) in the world’s biggest initial public offering (IPO), which valued the company at $1.77 trillion (£1.34 trillion) (BBC, 12 June 2026). 

News of a potential US-Iran peace deal on 15 June led to a global rally, with many markets opening in the green, including the Nikkei (5%), FTSE 100 (1%), and the S&P 500 (1.5%) (the Guardian, 15 June 2026). 

The following day, the Nikkei broke through the 70,000 point mark to reach a record high (the Japan Times, 16 June 2026). 

The technology sell-off reemerged on 23 June. Again, the KOSPI experienced a sharp fall of 10%, and trading was temporarily halted (the Guardian, 23 June 2026). European and US shares also fell, including the US technology-focused index, the Nasdaq, dipping 1% as SpaceX shares tumbled 16.4%. 

Once again, the sell-off was short-lived, with several indices, including the Dow Jones and Stoxx 600, hitting record highs on 25 June (the Guardian, 25 June 2026). 

UK

On 22 June, UK Prime Minister Keir Starmer announced his resignation. While markets reacted to the news relatively calmly, uncertainty over the coming weeks could lead to volatility. 

According to the Office for National Statistics (17 June 2026), inflation stayed at the same rate as the previous month at 2.8% in the 12 months to May 2026. Economists had expected a rise to 3%. This information is likely to have played a role in the Bank of England opting to hold interest rates where they are. 

S&P Global’s Purchasing Managers’ Index (PMI) series measures the health of businesses, and the results for May were a mixed bag.

Despite facing substantial pressure as prices rise, UK factories recorded a reading of 53.9 (a reading above 50 indicates growth) and reached a four-year high (the Engineer, 1 June 2026).

On the other hand, the service sector, which accounts for around 80% of the UK economy, fell into contraction territory with a reading of 49.3 (Reuters, 3 June 2026).

Europe

Eurozone inflation increased from 3% to 3.2% in the 12 months to May 2026, according to Eurostat (17 June 2026). The news prompted the European Central Bank to lift interest rates. 

Further data shows eurozone GDP fell by 0.2% in the first quarter of the year, with Ireland’s GDP falling 12.1% (Eurostat, 5 June 2026). Two consecutive quarters of decline would place the eurozone in a technical recession, so economists will be looking closely at the bloc’s performance in the third quarter. 

Economists at the research institute DIW (Yahoo! Finance 18 June 2026) warned that the German economy, the largest in Europe, was at risk of a recession due to a possible energy shock caused by conflict.

Despite this negative news, S&P Global’s PMI (1 June 2026) shows factory output increased to a four-year high in May, resulting in a reading of 51.6. 

US

US inflation was in line with expectations at 4.2% in the 12 months to May 2026, but was higher than the 3.8% recorded in April (BBC, 10 June 2026).

In good news, the US economy added more jobs than expected. Economists had predicted 85,000 jobs would be added in May, but the reality far surpassed that at 172,000 (CNN, 5 June 2026). The boost was partly attributed to the 2026 FIFA World Cup taking place in the US, leading to a hiring boom of hospitality workers to prepare for the influx of tourists. 

US-based company Alphabet, the parent company of Google, said it plans to raise $80 billion (£60.6 billion) in equity to fund its vast AI infrastructure investments (the Guardian, 2 June 2026). It would mark the largest equity raising ever. The news led to shares falling by around 4%. 

Asia

Chinese exports jumped 19.4% year-on-year in May, with chip exports more than doubling (AP News, 9 June 2026). 

Inflation pressure led to Japan’s central bank hiking interest rates from 0.75% to 1% (BBC, 16 June 2026). While the increase might seem insignificant, it’s the highest rate in Japan since 1995. 

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 

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Approved by Best Practice IFA Group Limited on 09/07/2026.