June 2025
INVESTMENT MARKET UPDATE
Welcome to our latest global investment market update
A warm welcome to the latest look at the global economy and what recent news means for investments. We are grateful to our friends at Charles Stanley for their input into this update.
The highlights
Global equity markets surged to record highs last week, with the S&P 500, Nasdaq 100 and Dow all hitting fresh peaks. The FTSE 100 crossed the 9,000-point mark for the first time, driven by expectations of a Bank of England rate cut, attractive valuations compared to US stocks and recent UK regulatory reforms aimed at boosting the City. Investors also viewed the UK as a relative safe haven amid US and European trade uncertainty.
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Indices in Germany, France, Japan, India, Brazil and Australia also touched or approached all-time highs. The MSCI All Country World Index, which tracks developed and emerging markets, reached another milestone.
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The rally was fuelled by expectations of rate cuts, strong corporate earnings and resilient economic data, despite ongoing geopolitical risks. The broad-based uptrend suggested investor confidence in a soft economic landing and a growing resilience to political and trade disruptions.
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Second-quarter earnings season began with a mixed but active start. Big US banks led early results with strong profits driven by consumer credit and investment banking rebounds. Airlines such as United posted solid numbers but offered cautious guidance due to fuel costs and demand volatility. Technology names like Apple and TSMC performed well, reporting record services revenue and profit respectively. Consumer staples like PepsiCo outperformed, while communications and media companies delivered mixed results amid advertising headwinds.
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Overall, more companies beat expectations than missed, but corporate commentary flagged concerns about tariffs, inflation and softening demand.
Trump
The US dollar fell sharply last week after reports emerged that President Trump may attempt to remove Federal Reserve Chair Jerome Powell. The potential move raised concerns about central bank independence and rattled investor sentiment. The dollar dropped as much as 0.7 percent, while gold rallied and Treasury yields rose. Analysts warned that removing Powell, whose term runs until 2026, would undermine the credibility of US monetary policy and weaken the dollar’s global standing.
Trump also announced sweeping new tariffs on imports from the EU, Mexico, Brazil and Canada, citing trade imbalances and national security concerns. The levies, set at 30 to 35 percent, are part of a broader “reciprocal tariff” strategy. He also criticised Mexico over drug trafficking and migration issues, despite recent cooperation.
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Further measures included planned tariffs on pharmaceutical and semiconductor imports. Trump said pharmaceutical levies could reach 200 percent, with a one-year grace period for companies to bring production back to the US. Semiconductor tariffs may follow a similar model, potentially affecting both components and consumer tech like laptops and phones.
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Rio Tinto revealed last week that US aluminium tariffs raised its first-half costs by over 300 million dollars. The miner, which ships most of its aluminium output to the US, said the 25 to 50 percent tariff hike in June added 321 million dollars in gross costs. The company noted that the impact had not yet been fully absorbed and warned of inflationary pressure and growing supply uncertainty.
Economics
UK Chancellor Rachel Reeves delivered her second Mansion House speech, describing a new set of “Leeds Reforms” intended to unlock investment and encourage broader stock market participation. However, many saw the speech as cautious. While she proposed regulatory easing and modest changes to encourage listings, she avoided more ambitious policies such as ISA reform or bank taxes, despite speculation. Much of the content echoed pledges from the previous government, leading to questions about Labour’s appetite for bolder action.
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UK inflation unexpectedly rose in June. Headline CPI reached 3.6 percent, its highest level since January 2024, while core CPI held at 4.4 percent. The rise was driven by transport, clothing and food prices, coming in slightly above forecasts and Bank of England projections. Despite this, wage growth is cooling, and GDP shrank again in May. As a result, markets still expect a rate cut in August, though the case is less clear-cut.
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In the US, June inflation data came in hotter than expected. Headline CPI rose 2.7 percent year-on-year, up from 2.4 percent in May, while core CPI hit 2.9 percent. Both measures rose 0.3 percent month-on-month. Analysts cited new tariffs as a key driver, suggesting early signs of imported inflation. The figures have dampened hopes for a near-term Fed rate cut, with markets now expecting the central bank to hold rates steady at its next meeting on 30 July.
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Other US data showed continued economic resilience. Retail sales rose modestly in June, supported by demand for services and essentials. Jobless claims also fell more than expected, highlighting labour market strength. These indicators support the Fed’s cautious stance and reduce pressure for immediate policy easing.
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Japan’s 10-year bond yield climbed to 1.59 percent, the highest level since the 2008 financial crisis. The rise reflected expectations of stimulus ahead of elections, as well as global bond market volatility and concern over US tariffs on Japanese exports. Some analysts warned that Japan’s long-standing role as a low-yield anchor could be coming to an end.
Geopolitics
President Trump has issued a 50-day deadline for Russia to agree to a ceasefire in Ukraine. If unmet by 1 September, the US will apply 100 percent tariffs on all Russian exports and introduce secondary sanctions on countries that continue to buy Russian oil.
The plan targets buyers such as China, India and Turkey, as well as some European states. At the same time, the US is boosting military aid to Ukraine and urging NATO allies to increase support. The strategy combines economic and military pressure to isolate Russia and reshape global energy flows.
Crypto
Bitcoin surged above 123,000 dollars last week, a new all-time high, driven by large inflows into spot Bitcoin ETFs and rising political support. A single-day inflow of 1.18 billion dollars marked growing institutional interest. “Crypto Week” in Congress also boosted sentiment, with lawmakers debating the GENIUS Act, which would set federal rules for stablecoins. Support from the Trump administration added further momentum.
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Standard Chartered launched fully regulated spot trading in Bitcoin and Ethereum through its UK branch. The service allows institutional clients to trade crypto using familiar FX platforms, with settlement handled by the bank’s own custody system. CEO Bill Winters called digital assets foundational to the future of finance, and the move is expected to encourage broader institutional adoption.
IPOs
CFC, a private equity-backed insurtech valued at 6.7 billion dollars, is preparing for a potential London IPO. This would be a significant step for the UK listings market, which has struggled with post-Brexit uncertainty and several high-profile delistings. As a fast-growing, tech-driven business with a global footprint, CFC’s flotation would signal renewed confidence in London as a venue for scale-up listings.
In the US, Grayscale filed for an IPO with the SEC after converting its crypto trusts into spot ETFs. While terms remain undisclosed, the listing would mark a milestone in the integration of crypto into mainstream financial markets, reflecting both regulatory progress and institutional demand.