Monthly Market Report – June 2025
Despite the increase in geopolitical tension, U.S. stock markets continued to rise and hit new all-time highs. Conversely, major European indices saw slight corrections. A similar pattern was seen in the bond market, with the U.S. yield curve shifting upwards following bond price increases, while European curves experienced slight price declines.
The Israeli attack on nuclear facilities in Iran on June 13 reignited geopolitical risk. Initially, the market reaction was mild, focusing on the price of oil. The WTI benchmark barrel rose by +14%, raising concerns of a global inflation spike.
The market’s main concern centered on a blockade of the Strait of Hormuz, a route for about 30% of the world’s oil consumption. However, due to both military capabilities and potential retaliation by other producing countries, the likelihood of closing Hormuz faded.
On Saturday, June 21, the U.S. bombed Iran, joining the Israeli offensive, which led to stock market sell-offs and crude oil buying during the Monday, June 23 session. However, the following day, Donald Trump announced a ceasefire in the region, which revived risk appetite, allowing Wall Street to resume its bullish trend and wiping out crude oil gains.
During the final days of June, U.S. stock indices managed to break resistance levels, reaching new historical highs. The S&P 500 hit 6,215 points for the first time ever during the last session of the month. This resulted in a +4.96% return in June and +5.50% year-to-date. The strong performance of large-cap tech stocks (especially NVIDIA) was key.
Meanwhile, European stock markets did not follow the U.S. indices. The Eurostoxx-50 fell -1.18% in June, though it closed above monthly lows. This has helped narrow the performance gap between European and American equities considerably.
The ECB cut rates for the fourth consecutive time this year, lowering the Eurozone benchmark rate to 2.0% with a 25-basis-point cut. The move was fully priced in, but the market disliked Lagarde’s post-announcement remarks, which suggested the rate-cutting cycle may be over.
Conversely, the U.S. curve performed well in June, showing a notable downward shift. The 10-year U.S. yield fell from 4.40% in May to 4.23% at the end of June, implying a +1.42% price gain.
The Fed kept rates at 4.50%, as it had in the previous 3 meetings. Afterward, Donald Trump verbally attacked Powell, claiming the U.S. economy needs rate cuts of 200 to 300 basis points. Powell will remain in office until May 2026, but the market expects Trump to name a successor soon. A Trump-aligned replacement would likely favor lower rates, potentially shifting the U.S. curve downward.
The dollar continues to depreciate against other currencies. The EUR/USD exchange rate hit a new annual high of 1.178, a level unseen since September 2021. As a result, the EUR/USD pair ended the first half up +13.84%.
On the macroeconomic front, inflation levels remain fully under control. In Europe, annual inflation was +1.90%, below the ECB’s 2.0% target. In the U.S., inflation met forecasts at +2.4%, while core inflation came in below market expectations.
The U.S. GDP for Q1 was revised downward for a second time, from -0.20% to -0.50%, due to weaker service sector consumption.
Finally, although Trump’s reciprocal tariff extension ends in July, no new trade deals have been finalized between the U.S. and other countries. Only China confirmed a minimum agreement signed in Geneva, resuming rare earth exports to the U.S. and easing semiconductor restrictions.
Did you find this Monthly Market Report – June 2025 useful? If you’re interested in staying up to date with economic analysis and market trends, we invite you to explore other recent reports on our blog:
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