Stay up to date with the latest market trends, economic shifts and key financial developments across the UK, US and Asia.
Key market events
- Middle East heat puts central bankers and markets on ice – President Trump has set a two-week deadline on the decision on whether the US will join Israeli strikes on Iran.
- BoE holds rates – the Monetary Policy Committee voted six to three to keep interest rates at 4.25%, due to increasing uncertainty and inflation. The three members who voted for a 0.25% cut reasoned a softer labour market.
- Fed holds rates – the US Federal Reserve kept interest rates steady for the fourth consecutive meeting since December 2024. Fed Chair Jerome Powell stressed the dependence on incoming data, noting inflation may edge up again.
- BoJ holds rates – the Bank of Japan voted unanimously to keep interest rates at 0.5% and said it would slow the pace of quantitative easing next year.
- UK inflation edges lower – the Consumer Price Index eased slightly to 3.4% in May, but underlying price pressures remain. Volatile monthly data - such as changes in Vehicle Excise Duty and airline fees - have added some noise to the picture.
What this means for financial advisers and clients
Central bankers are adopting a wait and see approach to the risks posed to their economies.
Markets are relatively undisturbed at the moment by the conflict in the Middle East, and the related rise in oil prices, but that could change if oil prices remain higher for a longer period or spike further.
The other risk weighing is the impact of Trump’s tariffs, although there has been positive movement this week with a trade deal between the UK and US signed. This move will encourage Japan and the European Union, who will hope to seal similar agreements soon. Clearly there are risks to the upside as well as the downside, so there is logic to the collective approach from the central banks. Investors may also benefit from looking beyond noisy headlines and sticking to their long-term strategic goals.
Chart of the week - US dollar
Source: Peel Hunt, Federal Reserve Board (monthly data, broad trade-weighted exchange rates).
Why this matters
The chart above highlights the change in US dollar valuation against a broad basket of international currencies. So far 2025 has been a year of questioning US exceptionalism, with the decline in the value of the US dollar having a material impact on UK investors given the dominance of US equities in global markets.
You can see the magnitude of moves made over the years, which points to the additional currency risk embedded into unhedged exposure to US assets. Since the global financial crisis this wouldn’t have troubled UK investors due to the 60% rise in the US dollar against other currencies, but recent months and longer-term history show why they should pay attention to this risk.
Market recap
Mixed week for UK stocks
Ongoing hostilities in the Middle East boosted oil and defence stocks, however the broader index was weighed down by a combination of geopolitical concerns and inflation fears.
Dollar rebound
US stocks were flat over a shortened trading week; however UK investors gained from a 1% recovery in the US dollar.
Europe pulls back
Weakness in banking and consumer sectors contributed to a fall in European equities, with Germany’s DAX index sliding 1.1% on Thursday.
Japan gains
The Nikkei 225 saw a steady rise this week amid ongoing trade talks with the US. Nippon Steel jumped after its acquisition of US Steel, whilst chip-makers Advantest and Lasertec led the market higher.
Conflict sparks oil rally
The war between Israel and Iran has seen crude prices surge over the week. The market has pulled back slightly this morning in response to the US delaying a decision on its involvement.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | -0.60% | 9.81% |
| FTSE 250 | -0.39% | 4.04% |
| S&P 500 | 1.01% | -4.90% |
| NASDAQ | 1.29% | -3.53% |
| MSCI Europe ex UK | -1.37% | 11.57% |
| Hang Seng | 0.58% | 11.72% |
| Nikkei 225 | 1.18% | -2.87% |
| Brent Crude | 8.75% | -2.21% |
| Gold Spot | -1.81% | 19.44% |
| UK 10yr Gilt yield | -1bps | -3bps |
| US 10yr Treasury yield | -6bps | -19bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 19th 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.
