July 2025
The past month was marked by geopolitical turbulence, economic recalibration, and divergent performance across various asset classes. While equity markets extended gains on the back of earnings momentum and policy hopes, bond yields stabilised, oil prices spiked and the crypto space surged on US moves. Meanwhile, global investors contended with a more aggressive US trade posture under President Trump, alongside ongoing Middle East tensions and patchy macroeconomic signals.
Geopolitically, President Trump signed executive orders outlining sweeping tariffs, including a 10% baseline duty on dozens of countries. These measures, effective in early August, reignited global trade friction and threatened to upend fragile growth momentum. Elsewhere, diplomatic heat surrounded the Gaza conflict, with the UN hosting a two-day peace conference in New York late in the month. Regional instability also flared along the Thailand-Cambodia border, while the DRC saw both continued militia violence and progress in ceasefire negotiations with M23 rebels.
The IMF nudged its 2025 global growth forecast slightly higher to 3%, citing resilient domestic demand and pre-tariff inventory building. However, the institution warned that prolonged trade tensions could reverse gains and elevate inflation. In the US, GDP growth remained steady at around 2.1% on an annualised basis, although consumer spending softened slightly. Eurozone data surprised to the upside, as Germany and Spain posted strong retail and services activity, while China continued to stabilise following recent stimulus rounds. Soft US employment figures released late in July prompted speculation of an earlier-than-expected policy shift by the Federal Reserve, reinforcing hopes of easing in the coming quarter. Such optimism was tempered by persistently high valuations in US equity markets and lingering uncertainty around trade policy.
Central banks were essentially in holding mode. The Fed kept its benchmark rate steady at 4.25–4.5%, with two dissenting votes in favour of a cut and Chair, Jerome Powell, reiterated its data-dependent stance, citing the impacts of tariffs and fiscal volatility. The ECB also held rates unchanged, maintaining a cautious tone despite improving eurozone data. The Bank of Canada followed suit, holding at 2.75%, and warning of the productivity and inflation risks stemming from global protectionism.
Global equity markets delivered mixed returns in July. In the US, the S&P 500 and Nasdaq reached fresh record highs, buoyed by strong corporate earnings—particularly from AI heavyweights such as Nvidia and Microsoft. By month-end, the S&P 500 had gained 2.2% and Nasdaq rose 3.7%. In Europe, the FTSE 100 outperformed with a 4.2% rise, whereas Germany’s DAX posted a more muted 0.7% gain. In Asia, Chinese equities rebounded, with the Shanghai Composite up 3.6%, and Japan’s Nikkei added 1.4%.
Commodity markets were characterised by contrasting trends, with crude oil and precious metals benefiting from supply-side factors and safe-haven demand. By close, WTI was up 6.6% and Brent was up 6.4%; while gold was up 0.9% and silver 1.2%. Industrial metals, particularly copper, were whipsawed by Trump policies, demonstrating sensitivity to his whims and demand-side uncertainties.
The USD bounced sharply later in the month, posting its strongest monthly gain of 2025. Against the EUR, it appreciated around 2.1%, pushing EUR/USD down from ~1.18 to ~1.14. GBP also weakened, with GBP/USD sliding from 1.37 to 1.34. Analysts attributed the dollar rebound to trade policy, central bank actions, economic data and geopolitics. Despite the rebound, the USD remains down against major currencies year to date.
The standout story in digital assets was institutional expansion. Bitcoin ended the month up 7.3% and Ethereum surging more than 15% on record ETF inflows. July marked the best month ever for crypto ETFs, drawing $12.8 billion in net inflows, led by Ethereum's $5.4 billion share. Regulatory progress added momentum. President Trump signed the GENIUS Act, creating the US's first federal stablecoin framework. The SEC's launch of "Project Crypto" signalled a shift on oversight and on-chain infrastructure. Interestingly, a $9 billion Bitcoin liquidation by Galaxy Digital barely moved prices, evidence of deepening market maturity and institutional liquidity.