June 2025

June was a month where markets surfed a volatile mix of geopolitical disruption, shifting central bank policies, and surprising investor resilience. Despite a turbulent backdrop driven by Middle Eastern conflict and currency instability, global equities generally powered higher, oil and gold spiked and retreated, and Bitcoin closed at a record high. Central banks walked a fine line between easing policy and maintaining credibility, while inflation concerns gave way to cautious optimism in some quarters.

Geopolitics took centre stage early in the month as tensions between Iran and Israel exploded into a dramatic military exchange. On 13 June, Israel launched a series of coordinated airstrikes on Iranian nuclear and missile facilities, killing several high-ranking commanders. Iran responded swiftly, firing missile and drone barrages that damaged civilian and military infrastructure in Israel, including a direct hit on Soroka Hospital. The crisis escalated further when the United States entered the fray on 21 June, conducting strategic bombing raids on Iranian nuclear sites. Iran retaliated by targeting US military installations in Iraq and Qatar, while threatening to shut the Strait of Hormuz, a key global oil transit chokepoint. A fragile US-brokered ceasefire took effect on 24 June, calming markets and limiting further escalation.

While the Middle East dominated headlines, other regions also saw notable developments. The NATO summit in The Hague reasserted the alliance’s Article 5 commitments and outlined increased defence spending targets. In Asia, South Korea elected a new president in the wake of an impeachment, and European heatwaves fanned wildfires across the Mediterranean. The Quad held high-level talks on Indo-Pacific security, while Russian military manoeuvres in the Arctic raised further concerns.

On the economic front, the global growth outlook was trimmed slightly, with the World Bank forecasting 2025 growth at around 2.3% to 2.6%. Flash PMIs in major economies showed mixed signals: cooling inflation but tepid demand. Global trade remained choppy amid persistent tariffs and slowing momentum in key manufacturing hubs. However, the fear of immediate recession receded, replaced by a more nuanced picture of patchy regional recoveries and slowing but sticky inflation.

Central bank activity remained under intense scrutiny. The European Central Bank cut its deposit rate by 25 basis points to 2.00% on 5 June, citing progress on inflation and ongoing trade-related risks. ECB President Christine Lagarde signalled a possible pause in July, though reaffirmed flexibility. The US Federal Reserve held rates steady at 4.25% to 4.50% on 18 June, but markets interpreted dovish tones in Fed Chair Jerome Powell’s comments as paving the way for two rate cuts later in the year. The Bank of Japan held rates at 0.50% but slowed its bond tapering programme. Meanwhile, India’s central bank delivered a surprise 50-basis point cut and liquidity injection, while Mexico and Kenya followed with their own easing moves. Overall, a global theme of cautious policy normalisation took hold, with emerging markets moving faster to stimulate growth.

Global equity markets performed strongly in June despite geopolitical tensions. In the United States, the S&P 500 and Nasdaq hit fresh all-time highs, rising 5.0% and 6.6% respectively, driven by mega-cap tech and AI-related stocks. Risk sentiment improved notably following the Middle East ceasefire. In Europe, gains were more subdued: Germany’s DAX slipped 0.4% amid weak industrial data and trade concerns, while the UK’s FTSE 100 edged down 0.1%, weighed by a stronger pound. Asian equities outperformed. Japan’s Nikkei 225 surged 6.6% to a multi-decade high, supported by a weaker yen, upbeat tech earnings, and accommodative Bank of Japan policy. China’s Shanghai Composite rose 2.9%, boosted by central bank easing and a tech-led rebound, even as property sector concerns lingered.

Commodities markets were driven largely by geopolitics. Brent crude surged above $87 per barrel mid-month following the Israeli strikes, before falling back to $67.60 by month-end on ceasefire news and surplus inventories. Analysts at Morgan Stanley projected a further drop to $60 by early 2026. Gold briefly breached $3,300/oz on safe-haven flows, then settled at $3,320 as the dollar weakened. Silver, however, was the standout, up 10%. Copper rallied 4.5% in response to supply disruptions and strong tariff-related demand, while wheat futures slipped 3% on favourable harvest expectations. Overall, the Bloomberg Commodity Index posted a 2.4% monthly gain, though volatility remained elevated.

Currency markets saw pronounced moves, especially in the US dollar. The greenback weakened significantly, posting its worst first half since the 1970s. The euro climbed 3% to end the month around 1.17, supported by ECB action and US fiscal concerns. The pound strengthened by 2% to 1.37, hitting a three-year high amid strong data and stabilising political risks. The dollar’s weakness was attributed to uncertainty around the Federal Reserve, political pressure on central bank independence, and ballooning fiscal deficits. This currency shift helped support equity markets outside the US and underpinned commodity prices.

In crypto markets, it was another good month for Bitcoin, which closed at a record $107,663, notching its third consecutive all-time monthly close and gaining around 3% for the month.