Global markets weekly update

16.06.2025

U.S.

  • U.S. stock indexes fell on Friday amid increased nervousness in the Middle East, sending the market to a negative week overall. After recording gains the previous two weeks, the S&P 500 (-0.4%) and the NASDAQ (-0,6%) posted fractional weekly declines while the Dow finished down 1.3%. Major indexes were broadly higher through Thursday, boosted by some better-than-expected economic data announcements as well as reports that the U.S. and China had agreed on a plan to ease trade tensions.
  • The price of U.S. crude oil surged more than 7% on Friday to the highest level in four months after Israeli military strikes on Iranian nuclear facilities raised the possibility of oil supply shortages and renewed inflationary pressures for the larger economy. On Friday afternoon, oil was trading around USD 73 per barrel, up 12% for the week.
  • Similarly, the price of gold rose to new highs, trading around USD 3450 per ounce on Friday afternoon, up from USD 3320 at the end of the previous week and USD 2600 at the end of last year.
  • The CPI in May rose 2.4% on an annual basis, reflecting a cooler-than-expected increase last month and signaling signalling Donald Trump’s tariffs are so far putting only modest pressure on consumer prices. On a month-to-month basis, the Consumer Price Index rose 0.1% in May, less than most economists had expected. The core measure, which strips out changes in food and energy prices, remained flat at 2.8 per cent, against expectations of a slight rise. Tariffs have not yet impacted goods prices, perhaps because companies have built inventories, and they continue to do so even during this 90-day pause.
  • The closely watched consumer sentiment index rose to 60.5 from 52.2 in May, surpassing economists’ expectations and indicating a better backdrop for public confidence. Inflation expectations, meanwhile, ticked lower. The one-year outlook retreated to 5.1% from 6.6%, and the five-year forecast eased to 4.1% from 4.2%, suggesting that consumers are less worried about persistent inflationary pressures.

Europe.

  • The Eurostoxx 600 ended the week 1.57% lower amid heightened tensions in the Middle East. Major stock indexes also fell. Germany’s DAX dropped 3.24%, Italy’s FTSE MIB lost 2.86%, and France’s CAC 40 Index declined 1.54%. The UK’s FTSE 100 Index finished the week little changed.
  • UK’s GDP shrank by a larger-than-expected 0.3% in April from March, the biggest monthly drop since October 2023 and more than the 0.1% decline forecasted, as global trade tariffs and domestic tax rises kicked in. Exports of goods to the U.S. fell by GBP 2 billion in April, the largest monthly decrease since records began in 1997. The labor market cooled further following increases in employer social security contributions and the minimum wage. Unemployment hit a four-year high of 4.6% in the three months through April.
  • Industrial output in the eurozone in April contracted 2.4% sequentially, much more than the 1.8% estimated. The eurozone’s trade surplus shrank much more than expected to EUR 9.9 billion in April from EUR 37.3 billion in March.

Japan

  • Amid geopolitical tensions and renewed trade-related concerns, Japan’s stock market returns were mixed over the week, with the Nikkei 225 Index gaining 0.25% and the broader TOPIX Index down 0.46%.
    • As investors sought assets perceived as safer, the yen appreciated to the high end of the JPY 143 against the USD, weighing on the profit outlook of Japan’s export-driven companies.
  • With U.S. President Donald Trump indicating new proposals to set unilateral tariffs on important trading partners, as well as insinuating further import taxes on cars, the yield on the 10-year Japanese government bond fell to 1.40%. Investors’ focus was on the upcoming G7 summit, considered as possibly setting the stage for Japan and the U.S. to reach a trade agreement following two months of negotiations.
  • On the economic data front, revised figures showed that Japan’s GDP growth was flat over the first quarter of 2025 compared with the prior three-month period

China

  • Chinese equities declined over the week amid renewed concerns over a persistent deflationary environment. The Shanghai Composite Index and the onshore blue chip CSI 300 retreated 0.25%.
  • China’s CPI edged lower in May as deflationary trends continued to drag on the economy. National Bureau of Statistics’ figures show the consumer price index fell 0.1% from the same month last year. That’s the fourth straight month of decline.
  • Economists’ outlook for prices in China remains weak despite a more optimistic view of the broader economy in the near term after China and the U.S agreed to a temporary tariff truce in May.

Portfolio considerations

Equities

  • Despite trade and geopolitical uncertainties, economic data has remained resilient in the first months of the year, considering GDP growth, the labor market and inflation. As we enter the second semester, there are several catalysts to monitor: trade negotiations with China and other economies, a potential tax bill in the U.S. and ongoing geopolitical tensions (even though the latter have historically had a short-lived impact on financial markets).
  • The market has rebounded and recovered over 20% since Trump’s “Liberation Day”. As a result, we could see bouts of volatility emerge as investors await and digest news. These can be used as opportunities to add quality names at better prices, while still favoring diversification.

Fixed Income

The still elevated levels of carry represent some of the highest yields of the past twenty years, making them very attractive for investors. We recommend overweighting intermediate and long-term bonds. We also like AT1 bonds, despite the large spread tightening seen during the last 2-3 years. We favor CoCos issued by large and systemic size banks with stable models and wide diversification. We also prioritize early call dates around 2028-2029 to mitigate duration risk and conservative coupon structures (high-reset coupons) to avoid non-call events.

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