Stay up to date with the latest market trends, economic shifts and key financial developments across the UK, US and Asia.
Key market events
🛢️ Markets rally as Israel-Iran truce appears to hold – a fragile peace in the Middle East has boosted risk sentiment, and seen oil prices collapse from recent highs.
📉US dollar weakens further – increased expectations of rate cuts have extended US dollar weakness, down over 10% in 2025 and set for the worst first-half performance since 1973.
✂️ Powell under pressure – US Federal Reserve (Fed) Chair Jerome Powell - whose term ends in May 2026 - reiterated the need for a cautious approach to cuts whilst testifying before US Congress this week. But the political narrative is shifting, with President Trump hinting at an early announcement on his successor - potentially shaping the Fed’s path from the sidelines.
🏦 UK jobs market cools – Bank of England governor Andrew Bailey highlighted that UK employers have slowed hiring and wage growth in response to April’s National Insurance hike.
🪙 US-G7 deal close – the US now plans to remove the Section 899 provision from the upcoming budget bill, which would’ve allowed retaliatory taxes on individuals or entities from non-US countries. The deal with the G7 has been agreed in exchange for an exemption for US companies from OECD Pillar 2 taxes that set a global minimum 15% corporate tax rate.
What this means for financial advisers and clients
Markets breathed a sigh of relief as tensions in the Middle East eased. The dramatic fall in oil prices is notable, down 15% this week and 20% compared to last year, and has eased inflation worries. Central banks now have a clearer path for interest rate cuts, as shown by bond yields compressing this week, however, the 9 July deadline for reciprocal tariffs still looms on the horizon.
Amongst the ebbing and flowing of events this year there’s been one fairly consistent trend – the declining value of the US dollar. This week the narrative supporting further weakness has been increased expectations of Fed rate cuts. In a stark shift, traders now widely expect the Fed to cut rates by at least 0.25% by September, with roughly 0.5-0.6% in total easing expected by year-end. Hopes for interest rates cuts have grown, helped by more positive signals from Fed representatives. Governor Christopher Waller said tariffs are unlikely to push inflation higher, meaning rate cuts could begin as early as July. Governor Michelle Bowman has also spoken out in support of a rate cut as soon as July.
Other Fed officials are likely to remain more cautious, waiting to see how trade negotiations resolve ahead of the reciprocal tariff deadline. Fed Chair Powell has emphasised the need for greater clarity on tariff impacts, and signalled his team will monitor upcoming Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) data for signs of price pressures. Whilst he has almost a year of his term left to serve, President Trump has suggested an announcement on his replacement could come as soon as this summer. Although an early nominee would have no formal policy influence, it does provide markets with a steer on the likely direction of future Fed policy – dovish and supportive of rate cuts if aligned with President Trump’s views.
Chart of the week - S&P 500 for the UK investor
Source: FE Analytics, Parmenion.
Why this matters
The chart above tells an important story for UK investors.
The red line shows the S&P 500 returns for a UK investor this year, whereas the blue line shows S&P 500 returns for US investors. The reason? The difference between the two is a result of currency movements between the US dollar and the British pound.
With the S&P 500 on the brink of hitting record highs- up almost 5% year-to-date- it’s worth highlighting the divergent outcome for UK based investors, who are instead down over 4% as a result of dollar weakness.
Market recap
Bond yields fall
US Treasury yields have compressed noticeably this week, as markets grew more confident that the Fed may resume cutting rates soon.
FTSE mid-caps outperform
UK domestic focussed stocks outperformed this week, with the FTSE 250 on course for its largest quarterly gain since 2020.
US stocks soar
US investors saw a 2.9% rise in the S&P 500 - the largest gain in six weeks - in response to improved rate cut expectations and geopolitical calm. Returns were far more muted for UK investors, just 0.9%, due to the pound strengthening against the dollar.
Oil plummets
Oil prices saw their steepest weekly decline since 2023 following the ceasefire between Israel and Iran.
Flight from safety
Gold pulled backed sharply in dollar terms, with investors having less desire for the safe-haven asset as risk sentiment improves. The decline was more pronounced for UK investors due to the relative strength of the pound.
| ‎ | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | -0.38% | 9.18% |
| FTSE 250 | 1.64% | 6.11% |
| S&P 500 | 0.89% | -4.35% |
| NASDAQ | 1.60% | -2.33% |
| MSCI Europe ex UK | -0.07% | 11.90% |
| Hang Seng | 0.50% | 10.94% |
| Nikkei 225 | -0.75% | -3.67% |
| Brent Crude | -15.31% | -18.69% |
| Gold Spot | -4.12% | 15.32% |
| UK 10yr Gilt yield | -5bps | -10bps |
| US 10yr Treasury yield | -13bps | -33bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 26th June 2025.
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This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
