The Pinnacle: June 2025
June 2 0 2 5 • I S S U E 54
Global Market Review – Q2 2025
Summary
Markets showed impressive resilience in Q2 2025. Despite a turbulent start driven by tariff headlines and macro uncertainty, global equities ended the quarter in broadly positive territory. The U.S. led the rebound, powered by mega cap tech, while Europe, the UK, and Asia posted gains in key sectors.
U.S. Markets
U.S. equities bounced back from a sharp early-April drop linked to the “Liberation Day” tariffs. The S&P 500 closed the quarter up 10.9%, led by the “Magnificent Seven” mega caps. However, market breadth was limited, with the equal-weighted S&P 500 trailing significantly.
Volatility was a hallmark of Q2, with the VIX spiking in April and calming by June. Retail participation surged, driving $6.6 trillion in trading volume and $138 billion in net inflows. Strong performers included tech, AI and defence stocks. Small cap stocks had 11.8% returns for Q2, and commodities struggled with a -3.1% return.
Earnings and revenue growth were solid, at ~5–6% and ~4.2% respectively while dividend growth slowed, with Q2 payout increases totalling $9.8 billion, half the Q1 pace.
For monetary policy (how the central bank manages money supply and interest rates), the Federal Reserve kept interest rates steady at 4.25% to 4.5% throughout the quarter. This reflects a careful approach to policy in a changing economic environment
Eurozone Markets
Eurozone stocks posted 3–4% gains in Q2, with strength concentrated in financials and defence. A 14% Euro rally vs. the USD boosted local returns and encouraged international inflows.
European equities delivered returns of 3.6% in local currency. However, again dollar weakness against the euro meant that in dollar terms, European equities also delivered 12.7%, helping make Europe the key recipient for flows from investors looking to diversify away from the US.
European government bonds outperformed their US and Japanese counterparts over the quarter. In contrast to the Federal Reserve which remains on hold, easing inflation allowed the European Central Bank (ECB) to deliver rate cuts in April and June, bringing the deposit rate down to 2.0%. At the June meeting
UK Markets
UK equities faced headwinds from high exposure to the energy and healthcare sectors which were the only negative equity sectors at a global level over the quarter. Despite this, the FTSE All-Share still delivered healthy returns of 4.4%
Big Oil and commodity stocks led the FTSE 100, while chemicals gained from fiscal policy clarity. IPO activity slumped to a 30-year low (£160 million raised), but buybacks surged to £39 billion. Dividend projections for 2025 held steady at £80.4 billion.
Mid-caps benefited from improved customs processes and export optimism, helping restore investor confidence.
Asia Emerging Markets
Asia’s emerging markets posted approximately 2.5% gains, driven by India, Indonesia, and Vietnam. India attracted record foreign flows following a stable budget and inflation outlook. ASEAN countries benefited from shifting global supply chains.
Export PMIs in Taiwan and South Korea rebounded, supporting the “China+1” narrative. Currency strength—especially in the rupee and baht—helped reduce volatility in regional bond markets.
Valuations remain attractive and improving earnings revisions signal continued long-term potential.
Commodities
Over the full quarter, gold gained about 6%, ending the period at US$ 3 303 per Troy ounce. The shares of gold-producing companies outperformed the physical metal.
The price of a barrel of Brent crude oil declined 10% to about US$67 in the quarter overall. At one point, oil fell below US$60/barrel for the first time since 2021, on expectations of demand destruction amid a trade-war induced global slowdown, as well as the prospect that the OPEC+ group of oil-producing nations would increase supply. The commodity rose sharply late in the quarter as the Israel-Iran conflict threatened a key supply route, but eased again as that risk subsided
Conclusion
Q2 reaffirmed the value of global diversification. The U.S. delivered strong returns, but regional resilience in the UK, Eurozone, and Asia broadened the opportunity set. With central bank policy, earnings, and trade developments still in play, selectivity will remain key into H2
Trade Talk Update – Q2 2025
Summary
Q2 2025 featured a cautious easing in global trade tensions, with early signs of a US–China truce, progress on US–UK trade negotiations, and proactive regional efforts in Asia. These developments helped stabilize markets and build confidence in supply chain resilience, despite headline volatility.
U.S.–China Trade Developments
A 90-day tariff pause, initiated in April, underpinned Q2 trade sentiment. Negotiators met in Geneva and London in May and June to negotiate tariff reductions and restore rare-earth supply chain access, removing controls that had disrupted high-tech industries. In June, China’s exports rebounded +5.8% YoY, with imports climbing +1.1%, suggesting businesses sped up shipments ahead of the pause’s August expiration. Despite the pause, corporate caution lingered, with many firms reporting tariff-related chatter into July, but Q2’s dialogue was largely constructive.
US–UK Trade Progress
May brought encouraging news: an “economic prosperity deal” in principle between the U.S. and UK, targeting lower tariffs on auto parts, steel, and digital services. By mid-June, President Trump was expected to sign a proclamation finalising this trade framework, signalling stable bilateral cooperation. While full details await Q3, UK exporters responded positively: services PMI climbed, and the FTSE midcaps saw increasing interest tied to improved access to the U.S. market.
Asia & ASEAN Trade Resilience
Asia focused on deepening regional trade as Q2 progressed. China lifted rare-earth export controls in June, boosting shipments by 32% and easing supply-side pressure. Meanwhile, Southeast Asian leaders, notably Malaysia, called for a unified front at ASEAN, urging stronger intraregional trade cooperation to buffer against U.S. tariff threats. South Korea’s trade envoy flagged a likely “inprinciple” agreement with Washington by the August deadline, with potential access to U.S. farm markets included.
Outlook & Strategy
While Q2’s trade momentum is encouraging, several key risks remain:
The 90-day US–China pauses ends in early August—untested commitments will matter.
Finalisation of US–UK framework details is pending, potentially reshaping export dynamics.
Regional ASEAN unity and South Korea–US agreements will influence Asia’s supply chain realignment.