Written by Shane Balkham
Investors may be forgiven for thinking that last week was all about Elon Musk and the Initial Public Offering (IPO) of SpaceX. On Friday, SpaceX went public with an initial valuation of $1.8 trillion, making it the sixth largest company by market capitalisation, and brought with it an interesting set of problems for index providers.
The role of an index provider is to provide access to the broad market (depending on what the index is trying to replicate), and there are rules on when new companies can be included in that index. For example, the S&P indices have strict rules on profitability, whereas the Nasdaq has altered its methodology, clearing the way for faster entries to its indices for companies that have gone through an IPO.
What this really shows is that passive investing does have active elements and always has done. Understanding that is crucial, especially when identifying the sources of risk within an appropriately diversified investment.
President Trump’s announcement of “a very strong memorandum of understanding that is a little conceptual” suggests that any agreement would focus on opening the Strait of Hormuz to commercial traffic, in exchange for an end to the US embargo on Iran and the unfreezing of meaningful amounts of Iranian assets.
The details of this purported agreement have not been released, and it is notable that there have been dozens of instances to date in which predictions of an imminent deal have failed to come to fruition. While an agreement that reopens the Strait of Hormuz would be market positive, investors have become numb to previous cries of wolf.
If signals of an imminent Iran agreement prove accurate, the May headline US Consumer Price Index (CPI) figure might represent an inflation peak. The report showed US CPI rose to 4.2% year-on-year to end of May, from April’s figure of 3.8%. This marks the third consecutive months of rising inflation in the US, coinciding with the war with Iran, as supply shocks are passed quickly through to consumers.
Focus will naturally turn to the reaction from the central banks and if the Strait of Hormuz does open, it does mean the inflation spike from oil should fade, even if it is likely the amount of traffic will be initially subdued. That does raise questions around the European Central Bank’s decision to raise rates by 0.25% last week, citing concerns around higher and prolonged energy prices.
Both the Federal Reserve and Bank of England have the benefit of meeting this week, and with the announcement of a potential resolution between Iran and the US, could afford policymakers more patience. However, there are many details to consider for policymakers, and while inflation is certainly key, growth is another significant measure. UK GDP contracted by -0.1% in April, following growth of +0.3% in March. The services sector was a key driver of this decline, while information and communication sectors remained in expansionary territory.
All performance figures are stated in Sterling terms, unless otherwise specified.
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All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 15th June 2026
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