Market Snapshot is a weekly view from our portfolio managers, offering sharp, thematic insights into the trends shaping markets right now.
Fast reading
- US consumer prices jumped to a new three-year high of 4.2% in May as the Iran war pushed up energy costs. Inflation is now twice the Fed’s 2% target.
- Italian banking giant UniCredit edged closer to taking total control of Germany’s second-largest lender Commerzbank this week, increasing its stake to 47.6%.
Concerns have been growing this week that the US Federal Reserve may opt to raise rates at its next meeting on 28-29 July because of the recent spike in inflation. US consumer prices jumped to a new three-year high of 4.2% in May as the Iran war pushed up energy costs. Inflation is now running at twice the Fed’s 2% target.
At the Fed’s June meeting – the first under new Chair Kevin Warsh – officials unanimously agreed to leave the benchmark rate unchanged at 3.50%–3.75%.
However, the renewed outbreak of hostilities in the Middle East this week, which saw the US launch strikes against Iran and the Revolutionary Guard target US military bases in Kuwait and Bahrain, has revived concerns about a fresh burst of global inflation.
On Wednesday, US President Donald Trump said he considered the ceasefire “over”.
In response, oil prices recorded their sharpest price rise in nearly two months this week. Brent crude was trading at US$77 a barrel on Thursday.
“Investors have become increasingly concerned that the Federal Reserve’s next policy decision will be a 25bps hike, arriving as early as this month’s Federal Open Market Committee meeting, because of the recent spike in inflation,” says Phil Orlando, Chief Market Strategist at Federated Hermes. “But we disagree.”
Orlando says he expects the Fed will look through the energy supply shock, which should be temporary, and keep rates unchanged.
“Last week’s disappointing US labour market data was good news for markets, which have pushed out their expectations for an eventual rate hike to later this year,” he explains. “We still expect stocks to hit a temporary air pocket from elevated levels over the summer and early autumn months.”
The blue-chip S&P 500 index edged slightly higher this week, closing up 0.5% in the four days to Thursday’s close1.
UniCredit nears total control
Elsewhere this week, Italian banking giant UniCredit edged closer to taking total control of Germany’s second-largest lender Commerzbank, increasing its stake to 47.6%. UniCredit was already Commerzbank’s largest single shareholder, having first started stake-building in 2024. The Italian bank announced on Wednesday that it had acquired an additional 17.6% of shares for €44bn, adding to the 30% stake it held previously.
Figure 1: Italy’s UniCredit on the rise
“UniCredit’s latest increase in its Commerzbank exposure to approximately 47.6% including derivatives leaves the group within touching distance of effective control,” says Filippo Alloatti, Head of Financials – Credit, Federated Hermes.
“Under German corporate governance rules, control is ultimately determined by the ability to command outcomes at shareholder meetings, meaning ownership above 45% would, over time, be expected to provide a clear pathway to control unless UniCredit deliberately chooses to limit its influence,” Alloatti says.
“That said, the process remains far from complete. Any move to consolidate Commerzbank would require European Central Bank (ECB) approval, with the notification and regulatory review process alone potentially taking up to six months. The operational and accounting work associated with consolidation, including purchase price adjustments, would likely extend the timeline further, pointing to a potential completion window around spring 2027. Given the circumstances, the ECB may also provide a degree of flexibility during the transition period,” he says.
Alloatti adds: “To borrow a Wimbledon analogy, UniCredit is now serving for the match: it has placed itself in a commanding position, but there are still several important points to win before the deal can be considered fully over the line.”
Previous Market Snapshot
02 July 2026 – Yen slides to 40-year low against dollar
Japan’s currency is under pressure. Will authorities intervene?
18 June 2026 – Fed’s new chair faces early test
Expectations are building that the US central bank may ultimately need to tighten policy again before the end of the year.
Share:
