June 2025 Review

Strike Action

Another month of intense geopolitical activity was highlighted by the US bombing of strategic nuclear and defence positions in Iran on the evening of Saturday, June 21^st.  That was hot on the heels of Israel’s attack on Iran on June 13^th.  However, while those incidents increased volatility in the short term, it failed to stop equity and bond market prices moving higher in June, consequently rewarding investors in those asset classes.

• Oil prices surged after the attacks on Iran in fear of a dislocation in the supply of oil, before a US brokered ceasefire soothed oil prices. The following chart from Trading Economics illustrates the magnitude of those price moves.

• Gold rose too, encouraged by geopolitical tensions and by a lower US Dollar. The latter was impacted by the potential of a less independent US central bank, resulting in the prospect of lower short term interest rates than currently forecast.
• Despite significant budgetary concerns in both the US and UK, bond yields there trended lower (higher prices).
• Global equities enjoyed a positive month of price appreciation despite the distractions elsewhere. The prospect of lower official interest rates in many developed economies helped positive sentiment.  The following chart from Trading Economics shows the rebound in a previously depressed US Consumer Sentiment Index provided by the University of Michigan.

Your Money

Portfolios continue to be conscious of high valuations in equities and the risks associated with market capitalisation weighted trackers that give too much exposure to a small number of highly valued companies.  After equity markets  enjoyed a strong second quarter of 2025, Pier continues to favour reasonably or attractively priced global equities.

Bond yields have fallen in the UK and US recently, but budgetary pressures remain in both countries – how to finance large and increasingly larger budget deficits.  There is little appetite for long duration (interest rate risk viz 20 to 30 year Government bonds), but a slowing US economy and a slow UK economy are worthy of lower interest rates which should support shorter maturities.  Two 0.25% rate cuts are priced into both US and UK futures markets.

June was a rewarding month for investors.  The tariff suspension, that sparked the revival in equity markets in the second week of April, comes due on July 9^th.  There’s talk of the suspension being extended which would please markets, but that is by no means guaranteed.  Tariffs have been a good revenue source since the beginning of April, so it is likely that some level of tariff will be a permanent fixture.  Part of President Trump’s policy has been a weaker US Dollar to help US exporters.  That seems likely to continue for the sake of  US exporters as their goods and services will be cheaper to foreign buyers.

The following table shows the performance of Pier’s portfolios for June (in bold), the second quarter of 2025, year to date and year-on year to end June 2025.