U.S. stocks declined over the week, falling back into negative territory for the year, amid rising geopolitical tensions in the Middle East. Israel’s airstrikes targeting Iran’s nuclear facilities and military leaders sent Brent oil prices sharply higher, which in turn boosted energy stocks while the broader index fell sharply.
Better than expected economic data for May as Consumer Price Index (CPI) rose by just 0.1% month-over-month, down from 0.2% in April and below market expectations of a 0.3% increase. While consumer sentiment showed improvement, with the index rising to 60.5 from 52.2, breaking a six-month streak of declines.
European equity markets ended lower amid renewed uncertainty surrounding U.S. trade policy. Meanwhile, the European Central Bank (ECB) signalled a potential pause in its easing cycle at the July meeting, with President Lagarde stating that the ECB is in a “good position” to achieve its medium-term inflation target.
In Asia, Japanese equity markets delivered mixed returns for the week after PM Ishiba said Japan won’t compromise its interests for a quick deal, stressing the need for a mutually beneficial agreement, while mainland Chinese stocks declined as the latest inflation data highlighted persistent deflationary pressures on China’s economy.
Last week, geopolitical tensions in the Middle East intensified after Israel launched airstrikes targeting Iran’s nuclear facilities. The escalation raised concerns of broader regional instability, prompting a risk-off sentiment across global equity markets. Investors reacted by shifting towards safe-haven assets, leading to a stronger U.S. dollar and a notable rally in oil prices, reflecting fears of potential supply disruptions in the region.
| Index | Current Price | 1 Week Return % |
|---|---|---|
| S&P 500 | 5,976.97 | -0.39% |
| DJIA | 42,197.79 | -1.32% |
| Nasdaq | 19,406.83 | -0.63% |
| FTSE 100 | 8,850.63 | 0.14% |
| Shanghai Composite | 3,377.00 | -0.25% |
| Sensex | 81,118.60 | -1.30% |
| ADX Index | 9,564.01 | -1.76% |
| Gold | 3,452.80 | 3.42% |
| Brent Oil | 74.23 | 11.67% |
Economic data held up well in H1 2025, despite trade, tax, and geopolitical uncertainties. While recent market strength may give way to some volatility, the outlook for the second half of 2025 and into 2026 is more favourable, with potential Fed rate cuts and greater clarity on policy. Corporate earnings could rebound next year. We continue to favour a diversified approach, focusing on U.S. large- and mid-cap stocks across tech, financials, and healthcare, and prefer intermediate to long-term bonds, especially with attractive 20-year Treasury yields.
Disclaimer
This commentary is provided for informational purposes only and does not constitute investment advice. For detailed insights, contact our investment team.
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