The stock markets have passed the halfway point of the year, continuing at the same pace they have maintained so far in 2026 – particularly during the record-breaking second quarter – and have posted another week of gains. They have been driven by a series of factors which, for the time being, are steering investors’ decisions in a single direction: on the one hand, confidence in the negotiations to reach an agreement in the Middle East, which is currently influencing oil prices and the decisions of central banks to combat inflation; on the other, the rush into technology shares – albeit with the odd misstep now and then – and anticipation of another season of impressive quarterly earnings.
The euphoria of shares
The trends outlined so far also extend to Europe, which went it alone yesterday whilst Wall Street was closed to mark the 250th anniversary of US independence. On the Milan Stock Exchange, the FTSE MIB index gained a further 0.75 per cent, bringing its weekly gain to 3 per cent and bringing it back close to the all-time highs reached in mid-June. Frankfurt’s DAX, however, set a new all-time high thanks to a further rise of 0.85 per cent, followed by the pan-European Stoxx 600 index (+0.69 per cent, also on Friday).
All in all, the Old Continent seems to be continuing to shine by reflected light, and beyond specific issues – such as the consolidation within the banking system, which just yesterday saw the end of the supplementary acceptance period for the offer launched by UniCredit (+0.10% on Friday) for Commerzbank (-0.45%) – it is moving in line with global trends, and primarily those in the US. The most significant factor, at least in recent weeks, concerns the reassessment of expectations regarding the Federal Reserve’s actions, following the appointment of the new chairman Kevin Warsh, the cooling of energy commodity prices and, most recently, the macroeconomic performance of the world’s largest economy.
The US labour market report for June, brought forward to Thursday specifically to make way for Independence Day, seems to have satisfied everyone in this respect. Pimco economist, Tiffany Wilding, described it – not coincidentally – as ‘Goldilocks’ overall, for both the Federal Reserve and the markets, as ‘it will allow more time to assess the situation as further data becomes available and should also go some way towards tempering market expectations of imminent rate rises’.
The safety of bonds
This, in fact, highlights another significant aspect of the situation, because, when all is said and done, there hasn’t been much cause for celebration in the bond market. Indeed, when looking at yields on US government bonds, there has been an increase in recent days for short-term maturities (4.14 per cent for the 2-year) and an even more marked rise for long-term maturities (the 10-year Treasury has returned to around 4.50%). Essentially, investors’ expectations are struggling to adjust to the new landscape and this, according to some, ultimately opens up new opportunities.