T3 Monthly Insights - June 2025

June was a period of strong recovery for Wall Street, evident from both the S&P 500 and Nasdaq closing the month at record highs, extending their rally despite the geopolitical tensions stemming from the armed conflict between Israel and Iran in mid-June. However, the dollar continued wallowing in bearish sentiments, depreciating for the sixth month in a row to close the month at 96.88 - the lowest price in four years - highlighting the stark divergence between equity market strength and currency weakness.

Market-watchers heaved a sigh of relief over the progress of U.S-China trade talks - which saw a finalised framework deal to restart rare-earth mineral exports and a set 55% tariffs on Chinese imports. Following the 90-day pause on tariffs initiated in April, the Trump Administration has maintained their stance on “reciprocal tariffs”, with the continuation in tariff implementation set for July 8. With this deadline on the horizon, U.S Treasury Secretary Bessent projected up to 10 new bilateral tariff deals to be set in place by September - aimed at stabilising relations with America’s trade partners. The Fed kept interest rates unchanged at 4.5% since December 2024, as policymakers continue their cautious stance to fully evaluate the economic impacts of Trump’s policies on tariffs, immigration and taxation. For now, the global market hangs in the balance of harsh escalation of reciprocal tariffs and hopeful negotiation wins, all while carefully navigating the fragile aftermath of a recently brokered Israel-Iran ceasefire.  

Unemployment in the U.S remained at 4.2% for the third month in a row, and the number of jobs created fell to 139K from May’s 147K. Despite this less-than-convincing data, consumer confidence rebounded 10 points to 60.7 from 52.2 in May. Although inflation rose for the first time this year to 2.4%, it stayed below economists’ expectations of 2.5%. A study by Michigan University indicated that Americans expected a 5% increase in prices next year, down from the 6.6% registered in May, suggesting a possible upturn in consumer sentiment over concerns about the American economy. 

The Eurozone saw inflation finally align with the European Central Bank’s (ECB’s) 2% target in May, dipping to a cooler-than-expected 1.9% as services inflation slowed sharply. In response, the ECB reduced key rates by 25bps, bringing its deposit rates to 2.0%, citing moderation of inflationary pressures and softer energy prices. Confident in their achievement of price stability, the ECB signalled a pause in further easing. The macroeconomic progress in the Eurozone saw increased inflows of foreign investment, bolstered by growing investor confidence and a weakening U.S dollar as a result of diverting capital flows resulting from American trade wars. As a result, the Euro closed the month at 1.1787 (+3.8% m/m) - the highest in four years and continuing the strong appreciation trend for the seventh month in a row.

The pound enjoyed the same appreciation trend to date, closing the month at 1.3732 (+2.04% m/m). Inflation cooled down to 3.4% from the previous month’s 3.5% but still above the Bank of England’s target. Interest rates were held at 4.25%, citing concerns over Middle Eastern conflicts and high energy prices. 

Gold ballooned to its highest price ever of $3,452.80 per ounce in mid-June, as geopolitical tensions flared following Israel’s surprise attacks on Iranian military sites, driving frantic safe-haven demand. However, the rally proved short-lived, suppressed from fresh selling pressure from the weakening dollar and broader economic jitters. As a result, a sharp reversal triggered, and by month-end, gold gains were eradicated, closing at $3,307.70 (-0.23% m/m). Meanwhile, crude oil prices closely mirrored Middle East volatility, spiking over 20% intra-month to $75.14/barrel, before retreating to close the month at $65.11/barrel (+7.11% m/m), as tensions eased.