Your June 2026 market update: Keir Starmer resigns, big shifts in big tech, and key interest rate decisions

This is part of our monthly series. Catch up on last month’s summary here: Your May 2026 market update: stock markets reach new highs despite global uncertainty.

‍

When we look back at June 2026, the first thing that’ll come to mind will probably be the sweltering heat dome that pushed UK temperatures to record highs for the month.

Of course, unlike much of British infrastructure, global markets don’t grind to a halt when the thermometer climbs above 30 degrees.

It’s been a busy month around the world. We’ve seen political change, seismic shifts in the tech market, and split decisions on interest rates that could be a sign of what’s to come this year.

Find out more in your June 2026 market update. 

The headlines: Japan has its best quarter on record as the US lags behind

Japan’s Nikkei 225 stormed to an all-time high on 25 June. A rally in tech and Artificial Intelligence (AI) infrastructure stocks drove growth. 

That’s been helped by a weak Japanese yen. Exporters selling to the global market have received more for their dollars than they might have otherwise.

Plus, Prime ‌Minister Sanae Takaichi was re-elected in February on a pro-business mandate. Businesses have benefited from this commitment to back commerce and revive the economy.

Less can be said for the rest of Asia. By the close of the first half of the year, overseas investors had pulled $137.36 billion from shares in South Korea, Taiwan, India, Indonesia, Thailand, Vietnam, and the Philippines.

In large part, that’s down to investors taking their returns from South Korea and Taiwan. Both countries have seen impressive growth this year thanks to big tech winners. That includes SK Hynix and Taiwan Semiconductor Manufacturing Co (TSMC). 

The US was also not so fortunate. Although the S&P 500 recorded yet another record high at the start of the month, the index closed down from its strong opening.

That was in large part due to a tech sell-off and rotation - find out more below.

Elsewhere, performance in Europe was mixed. Inflation came in at 2.8%, down from 3.2% in May, which was welcome news. Like in Japan, European chipmakers crucial to the AI buildout, such as Siemens, rallied at the end of the month.

However, European carmakers - particularly in Germany - looked less healthy. Traditional choices in the auto sector have struggled to compete with the low prices of Chinese challenger brands. 

That’s led giants such as Volkswagen to consider steps like shutting four German factories and making as many as 100,000 job cuts. 

Closer to home, the UK injected a new dose of political uncertainty in June. Prime Minister Keir Starmer announced his intention to resign. Yet, markets barely reacted, with the FTSE 350 recording a positive month (more on this below). 

Keir Starmer resigns, but markets stay calm

The big news in the UK this month was Keir Starmer’s announcement that he’ll resign as Prime Minister.

Starmer campaigned on a promise of stability, after a turbulent period that saw five government leaders in just 12 years. 

Instead, his short tenure will see him memorialised as Labour’s shortest-serving Prime Minister.

Such uncertainty can panic investors and cause them to react, leading markets to dip.

But markets were noticeably calm after his resignation. After a brief fall in the value of the pound and a rise in gilt yields (that’s the government’s borrowing costs), markets stabilised.

That was seemingly helped by newly-sworn in MP for Makerfield, Andy Burnham, confirming his intention to run for the job. 

With former Health Secretary, Wes Streeting, backing Burnham, June finished with just one candidate vying for the top job. A leadership contest could spook investors and see markets wobble. But investors seemed calmed by Burnham throwing his hat into the ring alone.

Markets responded even more favourably after Burnham laid out his vision as Prime Minister at a speech in Manchester.

Borrowing costs fell and the pound rose as Burnham described his intentions to set up a “No. 10 North” and devolve power away from Westminster. 

He also described a “laser-like focus on growth and regeneration”. That commitment could've contributed to the positive market reaction.

What remains to be seen is who the next Prime Minister will appoint as Chancellor, and what their fiscal policy will be.

US tech dominates headlines as investors pivot 

As it has throughout 2026, the US tech sector dominated headlines in June. However, it was a slightly different landscape this month.

Firstly, Elon Musk’s space exploration, communications, and AI company, SpaceX, listed on the stock market.

This was initially a resounding success - at least for Musk. Investors’ appetite for SpaceX saw the company raise $75 billion and pushed shares to $161 when the market closed on the first day of trading. That made Musk the world’s first trillionaire.

However, less than two weeks after its IPO, SpaceX announced a $20 billion bond issuance. The company later increased that to $25 billion.

Bonds are debts that companies take on to fund projects. They then pay back the loans with interest.

It’s a seemingly odd choice for a company that just raised $75 billion to then take on another $25 billion in debt.

But it speaks to the huge cost of AI infrastructure and what it’s going to take for the business to become profitable.

That understandably spooked investors. SpaceX shares peaked at just over $200 on 16 June. But when markets closed on 30 June, they were just below $171 - higher than they initially floated for, but less than that peak.

SpaceX isn’t the only company to have taken on large amounts of debt like this last month, either. Nvidia raised $25 billion, while Alphabet - the parent company of Google - issued $31 billion.

Investors move away from the Magnificent Seven to chipmakers

Investors also started selling off the so-called ‘Magnificent Seven’ at the end of June. That’s the group of big tech companies comprised of:

• Apple;
• Amazon;
• Alphabet; 
• Meta; 
• Microsoft; 
• Nvidia; and 
• Tesla.

The sell-off saw the companies’ combined value shrink by $2.3 trillion.

Concerns over the immense cost of the AI buildout no doubt played a part here. 

Another aspect has been price rises. As chipmakers have been busy supplying AI data centres, there’s been a surge in demand for those components.

However, they’re also critical for hardware, such as in Apple and Microsoft products. This creates a supply issue, pushing up chip costs.

Both companies announced price rises off the back of this. Investors may be worried about what this might mean for sales and revenue.

While the dip has been bad news for these businesses, companies supporting AI infrastructure benefited. 

The Philadelphia Semiconductor Index tracks a basket of chipmakers, like TSMC, Micron, and ASML. It’s often used as a proxy for how the sector’s performing.

Data shows that the index is up 6% this month. Across the year, it’s risen by 90%, versus a 3.4% decline across the Magnificent Seven.

Investors have been put off by the tech companies’ big AI outlays. Instead, it seems they’ve turned to the businesses that have profited from all that spending. 

Some central banks raised interest rates as inflation concerns continue

As for financial policy, interest rates paint an interesting picture of what’s happening around the world.

Since the start of the war in Iran, rising oil prices had pushed inflation above expectations. As a result, rather than cutting rates as predicted at the start of the year, central banks have largely held interest rates so far in 2026.

That’s what we saw in the UK and US in June. Both the Bank of England (BoE) and the Federal Reserve (Fed) held rates. 

Meanwhile, the European Central Bank (ECB) and Bank of Japan (BOJ) both raised rates this month.

While these economies are all facing different pressures, the ECB and BOJ’s decisions may be the first of many rate rises this year.

Risk warning

As always with investments, your capital is at risk. Past performance is not an indicator of future performance. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.