Rising Oil Prices Weigh on US Equities as Central Banks Meet

US equities declined last week due to concerns over huge artificial intelligence investments and rising oil prices, which also contributed to higher Treasury yields and increased market expectations for Federal Reserve rate hikes. The European Central Bank left rates unchanged as expected after a hike in June, with markets anticipating another rise in September. In contrast, the UK's inflation slowed to 2.6% in June, the lowest since March 2025, providing a boost to new Prime Minister Andy Burnham.

Investors will be watching central bank meetings and mega cap earnings this week, including the Federal Reserve's decision, which is expected to leave rates unchanged following June's inflation data. The Bank of England also meets with markets predicting no change in rates. On the earnings side, Microsoft, Meta, Apple, and Amazon are among the companies reporting.

The chart shows market expectations for central bank policy rates, indicating interest rate hikes in the US, Eurozone, and UK before year-end. However, if inflation peaks and then declines, this hawkish narrative may be difficult to maintain.