The first half of 2025 saw plenty of sharp turns—steep selloffs, surprising rallies, and headlines that kept investors on their toes. From tariff battles and interest rate delays to fresh trade deals and easing tensions, markets had no shortage of stories. Despite the noise, major indices ended the half strong, showing just how quickly sentiment can shift.
Q2 began with fresh U.S. tariffs under President Trump that rocked global markets. By April, the S&P 500 was down nearly 18%, and Nasdaq had dropped over 23%. The VIX—Wall Street’s fear gauge—spiked to levels not seen since the early pandemic era.
Safe-haven assets like gold and silver surged, driven by central banks aggressively stocking up. The Federal Reserve’s delay in rate cuts, combined with rising Middle East tensions, painted a gloomy picture, with inflation fears and downward earnings forecasts clouding the outlook.
But the mood turned sharply in late Q2. A ceasefire between Israel and Iran, breakthroughs in U.S.-China trade talks, and a pause on further tariff hikes helped stabilize sentiment. Both the S&P 500 and Nasdaq ended June at new all-time highs, reversing losses and posting over 5% gains for the year so far.
Europe’s benchmarks followed a similar path. The FTSE 100 and Germany’s DAX reached record levels by mid-year, while indices in France, Italy, and Spain narrowed their gap to all-time highs. The European Central Bank maintained a cautious stance on rate policy amid better-than-expected GDP growth.
In Asia, China and the U.S. finalized a trade agreement from the Geneva summit, helping boost Chinese markets in Q2. The People’s Bank of China (PBOC) noted improving sentiment despite persistent deflation concerns and weak domestic demand. Japan’s markets also posted positive returns, aided by steady policy rates and firming export data.
The Federal Reserve held rates steady at 4.25%–4.5% for four consecutive meetings. But beneath the surface, division grew: seven Fed officials now expect no cuts in 2025, while eight still anticipate two. That split underscores just how uncertain the road ahead is.
Meanwhile, oil prices jumped early in the year due to geopolitical shocks but stabilized by June. Inflation ticked slightly higher in May, with Core PCE (the Fed’s preferred metric) rising 0.2% month-on-month and 2.7% year-on-year.
| Index | Last Price | YTD Return |
|---|---|---|
| S&P 500 | 6,198.01 | 5.38% |
| Nasdaq Composite | 20,202.89 | 4.62% |
| Dow Jones Industrial Average | 112,367.81 | 5.50% |
| Shanghai Composite | 3,454.792 | 3.07% |
| Hang Seng | 24,221.41 | 20.75% |
| EURO STOXX 50 | 5,298.79 | 8.23% |
| FTSE 100 | 8,752.40 | 7.09% |
| CAC 40 | 7,730.97 | 4.75% |
| DAX | 23,709.60 | 19.09% |
| Nikkei 225 | 39,762.48 | -.33% |
| Nifty 50 | 25,453.40 | 7.65% |
| DFMGI (Dubai) | 5,669.15 | 9.90% |
| ADX Index (Abu Dhabi) | 9,919.82 | 5.32% |
| Tadawul (Saudi) | 11,129.64 | -7.53% |
| Silver | 36.2860 | 25.55% |
| Gold | 3,343.34 | 27.39% |
| US Dollar Index | 96.96 | -10.63% |
Source: Bloomberg.
Markets saw strong rebounds in Q2, but that doesn't mean it’s smooth sailing ahead. Elevated valuations and global policy shifts could bring new volatility in H2 2025. Here’s what we’re watching:
Investors enter the second half with renewed confidence but not without caution. While inflation remains stable and labour markets resilient, unresolved tariff negotiations and unclear rate timelines may stir fresh volatility.
The key? Don’t chase rallies. Stay diversified, stay informed, and stay aligned with your long-term plan.
Let our investment specialists help you tailor your portfolio for what’s ahead.
Disclaimer
This commentary is provided for informational purposes only and does not constitute investment advice. For detailed insights, contact our investment team.
