Bulls & Bears
Markets navigated one of the most dramatic weeks of 2026 — a roller-coaster defined by scorching inflation, geopolitical whiplash, and the most anticipated IPO in a generation. The week began with investors still reeling from the prior Friday's "Freakout Friday" — a brutal session that saw the Nasdaq crater 4.2% on a blowout May jobs report (+172,000 vs. 85,000 expected) that repriced Fed hike odds from 67% to 100% by December.
Mid-week, the narrative darkened further. May CPI printed 4.2% YoY — the hottest in over three years — with gasoline up 40.5% annually as the Strait of Hormuz closure (now entering its 4th month) continues to reverberate through global energy markets. The Dow broke below 50,000 for the first time. Super Micro Computer collapsed 28% on a $7B equity raise. Gold, which had been a safe-haven stalwart, shed 4.4% in a single session as the dollar caught a bid.
Then Thursday delivered the reversal. Trump announced a deal with Iran — a comprehensive settlement involving 12 nations, with the Strait of Hormuz set to reopen upon signing. Oil dropped 4%, chip stocks surged 8%, and the Nasdaq posted its best day in over two months. The week ends with markets cautiously optimistic: a peace deal that could ease inflation's biggest driver, a SpaceX IPO 4x oversubscribed, and a Fed meeting next week that will set the tone for the second half of the year.
Key Events This Week
📉 Freakout Friday (June 5) — Nasdaq –4.2%; Philly Semi –10%; S&P snaps 9-week win streak on jobs blowout.
📈 May CPI: 4.2% YoY — highest since April 2023; energy +23.5% YoY; core CPI 2.9% (below estimate).
🚀 SpaceX IPO — $75B raise at $1.75T valuation; 4× oversubscribed; begins trading today.
🕊️ Iran Deal — Trump announces settlement Thursday; Hormuz to reopen; oil –4%, semis +8%.
🏦 ECB hikes 25 bps — first G4 central bank to tighten in response to war inflation.
Western equity markets rebounded strongly on Thursday's Iran deal news, but Asian markets bore the brunt of the week's volatility. Japan's Nikkei tumbled 6.17% over the 5-day period, with South Korea briefly plunging 9% in a single session — a reminder that proximity to the Middle East conflict amplifies contagion risk across Asian manufacturing and energy supply chains. Hong Kong's Hang Seng shed 4.78% for the week.
By contrast, European equities surged. The Euro StoXX gained 3.41% on Thursday alone as investors priced in the dual tailwind of a Hormuz reopening and the ECB's decisive 25 bps rate hike — interpreted as inflation-fighting credibility. US indices recovered late in the week, though remain negative on a 5-day basis: S&P 500 –2.51%, Nasdaq –3.81%.
| Index | Today | 5-Day | Signal |
|---|---|---|---|
| ASX 200 | +0.57% | –0.81% | Resilient; resources led recovery |
| S&P 500 | +1.75% | –2.51% | Iran deal rally; Fed meeting looms |
| Nasdaq | +2.54% | –3.81% | Semis +8%; Oracle –8.6% drag |
| Russell 2000 | +3.02% | –0.49% | Small-cap: rate-hike fears easing |
| Euro StoXX | +3.41% | +0.73% | Peace dividend; ECB credibility |
| Nikkei 225 | –1.89% | –6.17% | BOJ governor hospitalised; rate uncertainty |
| Hang Seng | –0.64% | –4.78% | China caution; geopolitical proximity |
Wednesday's CPI release was the week's pivotal data point. Headline CPI rose 0.5% MoM and 4.2% YoY, matching the elevated consensus but still delivering a psychological blow to markets. Energy drove more than 60% of the monthly increase — gasoline is up 40.5% YoY, the highest reading since August 2022, a direct consequence of the Strait of Hormuz closure.
The bright spot was core CPI at 2.9% YoY — slightly below the 3.0% estimate — with core goods actually declining 0.1% MoM (first negative print of the year) and motor vehicle insurance falling 1.7% MoM. This gave the Fed some breathing room, but the headline number is politically toxic and operationally constraining. Real average hourly earnings are now negative for a second straight month — a consumer squeeze that could slow growth even without a rate hike.
Thursday's PPI added to the pressure: headline PPI rose 6.5% YoY — a 3.5-year high — though core PPI came in below expectations at 4.9% YoY. The pipeline for PCE inflation (the Fed's preferred measure) now projects ~4.0–4.1% YoY for May — far above the 2% target Kevin Warsh inherits at his first FOMC meeting next week.
| Indicator | Reading | vs Est. |
|---|---|---|
| CPI YoY | 4.2% | In-line |
| Core CPI YoY | 2.9% | Below |
| CPI MoM | +0.5% | In-line |
| Gasoline YoY | +40.5% | — |
| PPI YoY | 6.5% | Above |
| Core PPI YoY | 4.9% | Below |
| Real Wages YoY | –0.7% | — |
| Nonfarm Payrolls | +172K | +85K est. |
The ASX 200 demonstrated relative resilience against its global peers, closing the week down just 0.81% compared to the Nasdaq's 3.81% pullback. Today's session is broadly positive as the Iran deal news filters through: materials and miners are leading, while the financials sector is holding steady. The ASX 200 futures had pointed to a 1.7% open on the Iran news.
BHP +3.50% today
Iron ore giant surging as the Iran deal cools Middle East tensions and oil's decline improves global manufacturing cost outlooks. Vale raised its iron ore price forecast to $112/tonne for 2026.
RIO +2.40% today
Broad-based materials rally driven by copper (+2.28%) and iron ore strength. Peace dividend supports Chinese demand expectations.
WES (Wesfarmers) +2.56%
Consumer discretionary resilience despite broader retail caution. Wesfarmers' diversified portfolio — Bunnings, Officeworks, Kmart — provides defensive quality in uncertain times.
GMG (Goodman Group) +2.24%
Data centre and logistics REIT bouncing on AI infrastructure demand. Google backstopping a $35B Anthropic data centre financing deal supports the sector thesis.
REA Group –15% since Budget
Federal Budget changes to negative gearing (abolished for existing properties from July 2027) and CGT (minimum 30% tax) are hammering property-linked stocks. Citi cut REA's FY27 profit forecast 6% and reduced its target price 10% to $181.15.
Australian Banks Short positions at record
Westpac reported investor loan applications down 20% in three weeks post-Budget. Morgan Stanley forecasting –10% national house price decline; Westpac forecasting –3% Sydney, –4% Melbourne. Hedge funds have doubled short positions to record levels.
QBE Insurance –0.91%
Insurance sector facing headwinds from elevated energy-driven inflation impacting claims costs and reserve adequacy.
RMD (ResMed) –0.89%
Health tech underperformance continues. GLP-1 weight-loss drug threat thesis (Eli Lilly's retatrutide showing sleep apnea benefits) remains an overhang on the CPAP market outlook.
The most anticipated IPO of a generation is finally here. SpaceX priced its offering at $75B raise targeting a $1.75 trillion valuation — the largest raise since Alibaba's 2014 debut. The offer was more than 4× oversubscribed, with 30% of shares allocated to retail investors. In Australia, over 30,000 CommSec accounts bid for stock.
The bull case is straightforward: Starlink's satellite internet network is already generating billions in recurring revenue, Falcon 9 has achieved near-routine commercial launch cadence, and Starship's rapid reusability promises to fundamentally reshape the economics of space access. Baillie Gifford, which invested at a $31B valuation in 2018, identifies "cost per kilogram" as the key metric — and says Starship could compress it by orders of magnitude.
The bear case is equally loud. Short-seller Jim Chanos called the valuation "not worth $1.75T based on any reasonable assumptions" — noting SpaceX trades at 90× sales versus Tesla's 14×. Morningstar puts fair value at $63/share (versus the IPO price), with its "moonshot" scenario of $154/share assigned only a 7% probability. Goldman Sachs estimates SpaceX's ~30% initial float could grow to ~46% within a year, implying nearly $1 trillion of new equity supply entering the market by mid-2027.
| SpaceX IPO | Detail |
|---|---|
| Raise | $75 billion |
| Valuation | $1.75 trillion |
| Oversubscription | 4× demand |
| Retail allocation | 30% of shares |
| Price/Sales multiple | ~90× (vs. Tesla 14×) |
| Morningstar fair value | $63/share (base) |
| S&P 500 eligibility | Mid-2027 at earliest |
| Trading begins (AEST) | ~11:30pm tonight |
The commodity complex delivered a week of extraordinary swings. WTI crude fell 7.12% over 5 days, with Thursday's Trump announcement triggering a 4.2% single-session decline to $86.26 — the prospect of Hormuz reopening slashing the war premium that had sustained oil above $90 for months. Brent touched $98 at one point mid-week before retreating sharply. The EIA estimates global oil demand will fall 1.1M bpd in 2026 versus 2025, before recovering 2.5M bpd in 2027.
Gold had a remarkable reversal. After losing 4.4% on Wednesday (its worst day in months) as hot CPI data paradoxically boosted the dollar and triggered margin calls, gold recovered 2.4% Thursday on the Iran deal — closing back above $4,169. The precious metal remains up 3.06% today but is 5.41% lower over the 5-day period — a reminder that even safe-haven trades are not immune to regime-change volatility.
The week's standout performers were uranium (URA +5.86% today) and lithium (LIT +5.49% today) — both benefiting from a rotation into energy transition plays as lower oil removes short-term competition and longer-dated clean-energy demand expectations firm. Iron ore rose 2.88% today as Vale's constructive outlook and potential Hormuz reopening improve the Chinese demand picture.
Micron Technology +11.66%
Led the semiconductor recovery on Thursday, gaining 12% on the session as the Iran deal removed the geopolitical overhang. Up over 10% on the week after being down 13% mid-week.
Intel +9.27%
A Google order for 3 million+ tensor processing units (reported by The Information) triggered Monday's 11% surge. The Philly Semi index's 8% rise Thursday confirmed the sector's recovery.
Tesla +4.60%
JPMorgan upgraded to Neutral from Underweight with a new $475 price target (from $145), projecting $203B revenue by 2030. A dramatic reversal from one of Wall Street's most persistently bearish calls.
Broadcom +3.62%
Custom AI chip demand surging; features in Google's $35B Anthropic data centre deal. AI infrastructure capex cycle shows no sign of moderation.
Oracle –8.53%
Post-earnings slide after the company flagged capex of up to $95B in FY2027 (vs. ~$68B expected) and a $40B debt/equity raise. WSJ also reported OpenAI is planning steep AI pricing cuts that could pressure Oracle's cloud AI revenue.
Super Micro Computer –28%
Wednesday's worst performer — announced a $7B equity-related sales plan. The dilution shock was swift and severe, highlighting the capital intensity of AI server hardware at scale.
Apple –3.6% (2-day)
WWDC AI upgrades to Siri failed to impress investors — a classic "sell-the-news" event. The tepid response suggests the market demands more transformative AI integration than incremental feature updates.
Microsoft –1.77%
OpenAI's planned sharp AI pricing cuts (reported by WSJ) put pressure on Microsoft's AI co-pilot monetisation thesis, which depends on sustained premium pricing for enterprise AI tools.
Next week's calendar is dominated by the Federal Reserve's June 16–17 FOMC meeting — the first under new Chair Kevin Warsh. Markets are pricing in a hold at 3.50–3.75%, but Warsh is widely expected to drop the easing bias and signal that rate hikes are firmly in the committee's toolkit. With CPI at 4.2% and PPI at 6.5%, maintaining a neutral stance will be a delicate communications exercise.
Mon 15 June: SpaceX leveraged/inverse ETFs begin trading (ProShares, Direxion, GraniteShares, REX Shares, Defiance among the dozen issuers). Pre-IPO ETFs for Anthropic and OpenAI also filed.
Tue–Wed 16–17 June: Fed FOMC Decision — Kevin Warsh's first meeting as Chair. Expected hold at 3.50–3.75%, but language shift toward hawkish stance is highly anticipated. Watch the press conference for any hint of 2026 hike timing.
During the week: Bank of Japan policy meeting — expected +25 bps to 1.00%, though BOJ Governor Ueda's hospitalisation (missing his first scheduled meeting since 1998) adds uncertainty. Any hawkish surprise could further pressure the yen carry trade.
Ongoing: Iran deal signing — Trump stated it will occur "in Europe over the next few days." Hormuz reopening upon signing would remove the single largest inflationary pressure in global markets. Watch oil prices for confirmation.
Data watch: May PCE inflation (Fed's preferred measure, projected ~4.0–4.1% YoY), US retail sales, Australian employment report for May.
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