Equities Surge from Earnings.
It was a strong month for global stock markets, with major indices in the US and Europe reaching new record highs. This upward trend was supported by several positive factors. Corporate earnings across many industries exceeded expectations boosting investor confidence in the overall health and profitability of companies. At the same time, easing trade tensions, particularly the significant US-China agreement on rare-earth exports, helped reduce uncertainty that had been weighing on the markets.
Oil Prices Hit Choppy Waters.
It proved to be a volatile month for oil markets, with sharp price fluctuations driven by tensions in the Middle East and shifting supply-demand conditions. At the start of the month, oil prices surged sharply after Israeli airstrikes targeted Iranian nuclear sites, sparking fears of major supply disruptions. Brent crude climbed about 7%, while West Texas Intermediate (WTI) jumped 13%, marking some of the biggest weekly gains in over two years. Tensions escalated further when Iran threatened to close the Strait of Hormuz, a crucial route for global oil shipments. This drove prices higher, highlighting the market’s sensitivity to geopolitical events. However, by mid-June, a ceasefire between Israel and Iran eased the situation, lowering the risk premium on oil. As a result, prices pulled back, with Brent crude falling to about $68 per barrel by the end of the month.
USD Falls on “Hawkish” Stance.
The US dollar took a sharp tumble in June, falling to its lowest level in over three years. This decline was largely driven by mounting expectations that the Federal Reserve would soon begin cutting interest rates, starting with a probable 25 basis point reduction in July, followed by further cuts later in the year.
However, it was not solely economic data unsettling the markets. Attention also turned to a renewed confrontation between Federal Reserve Chair Jerome Powell and President Donald Trump. Trump did not hold back, publicly criticising Powell for being too “hawkish” and accusing him of stifling growth by resisting rate cuts, echoing his familiar criticisms during Trump’s previous time in office, when he frequently pressured the Fed to ease monetary policy.
Powell responded by defending the Fed’s independence and emphasising the need for a careful balancing act: controlling inflation whilst fostering steady economic growth. The tension escalated when rumours emerged that Trump might attempt to remove Powell before his term ended, a move that sent shockwaves through the markets and raised fears of political interference undermining US monetary policy.