25 Jun 2025
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Our Global Investment Solutions team produce a weekly market recap which aims to summarise the previous week’s major events and developments that may impact markets. They try to include points that may aid you in your decision making or conversations with clients. This is supplemented by a market data sheet, offering a summary of financial market performance. Last week’s summary is below.
Economic and political backdrop
The Bank of England (BoE) held interest rates steady at 4.25% as expected, citing elevated global uncertainty and persistent inflation pressures. Policymakers were split 6-3 over the decision. BoE Governor Andrew Bailey said, "interest rates remain on a gradual downward path," although the central bank said it would take a "gradual and careful" approach to further rate cuts.
Consumer prices in the UK rose by 3.4% annually in May, down from 3.5% in April. Services price inflation—which is closely followed by the BoE—slowed to 4.7% from 5.4% in April, matching the central bank's forecast.
Markets
Equity Markets
Last week, the MSCI All Country World Index (MSCI ACWI) lost -0.4% (6.4% YTD).
The US S&P 500 Index edged down -0.1% (2.1% YTD). US markets were closed on Thursday in observance of the Juneteenth holiday. Growth shares underperformed value stocks, and small caps outperformed large caps. The Russell 1000 Growth Index returned -0.4% (0.9% YTD), the Russell 1000 Value Index 0.3% (3.4% YTD), and the Russell 2000 Index 0.4% (-4.8% YTD). The technology-heavy Nasdaq Composite added 0.2% (1.1% YTD).
In Europe, the MSCI Europe ex UK Index ended the week -1.6% lower (8.3% YTD), reflecting concerns about tensions in the Middle East. Major stock indexes retreated. Germany’s DAX Index slipped -0.7% (17.3% YTD), France’s CAC 40 Index decreased -1.1% (5.7% YTD), and Italy’s FTSE MIB Index gave back -0.5% (18.4% YTD). Switzerland’s SMI Index fell -2.3% (5.6% YTD). The euro was little changed against the US dollar, closing the week at USD 1.15 for EUR.
The FTSE 100 Index in the UK lost -0.8% (9.6% YTD), and the FTSE 250 Index was flat (4.4% YTD). The British pound weakened against the US dollar, closing the week at USD 1.35 for GBP, down from 1.36.
Japan’s stock markets registered gains over the week. The TOPIX Index rose 0.5% (0.1% YTD) and the TOPIX Small Index added 1.0% (4.5% YTD). In the currency markets, the yen weakened to JPY 146.1 against the USD, from the prior week’s 146.1. While tensions in the Middle East heightened, the domestic focus was on the BoJ’s monetary policy meeting.
In Australia, the S&P/ASX 200 Index lost -0.5% (6.4% YTD) on slightly weaker employment data. Australian long-term government bond yields moved modestly higher, with the curve steepening marginally. The Australian dollar remained largely unchanged against the US dollar.
In Canada, the S&P/TSX Composite was flat (8.6% YTD).
Emerging markets and other markets
The MSCI Emerging Markets Index ended the week little changed (12.3% YTD), with the stock markets of India, Taiwan and South Korea contributing positively to performance. In contrast, those of China contributed negatively.
Mainland Chinese stock markets retreated as investors turned their attention to the economy after a batch of mixed data. The onshore CSI 300 Index lost -0.3% (-1.3% YTD), and the Shanghai Composite Index shed -0.3% (1.2% YTD). Hong Kong's benchmark Hang Seng Index was down -1.4% (19.9% YTD). The MSCI China Index lost -1.3% (16.5% YTD).
In Brazil, the benchmark Ibovespa stock index ended the week broadly unchanged. On Wednesday, Brazil’s central bank raised its key interest rate by a quarter point to 15%, its highest level in nearly two decades. It signalled that borrowing costs would remain steady for a long time as policymakers assess their impact on the economy. The central bank’s decision marked its seventh straight rate hike, which has increased the benchmark Selic by 4.5 percentage points since September, as policymakers try to tamp down cost-of-living increases.
In Mexico, Mexican stocks declined for the week. Mexico’s central bank is expected to cut its key rate by a half point at its next meeting on June 26. Banxico has delivered seven consecutive rate cuts—including three straight half-point reductions—since August, reflecting mounting concern about the economy as it starts to feel the impact of US tariffs. In May, the central bank slashed its GDP forecasts for this year and 2026, citing uncertainty driven by US trade policy. However, policymakers said that they did not expect Mexico to fall into a recession.
Fixed income markets
Last week, the Bloomberg Global Aggregate Index (hedged to USD) returned 0.2% (2.3% YTD), the Bloomberg Global High Yield Index (hedged to USD) 0.2% (3.6% YTD), and the Bloomberg Emerging Markets Hard Currency Aggregate Index 0.1% (5.0% YTD).
US Treasuries generated positive returns as yields across most maturities decreased in response to growing geopolitical concerns and the week’s economic data. Over the week, the 10-year Treasury yield decreased by -2bps, ending at 4.38% from 4.40% (down -19ps YTD). The 2-year Treasury yield declined -4bps, ending the week at 4.91% from 3.95% (down -33ps YTD).
US investment-grade corporate bonds also advanced, and new issuance in the market was, on average, oversubscribed. Meanwhile, sentiment in the high yield bond market was somewhat softer as the unsettled macroeconomic environment led to volatility in the equity market. However, the issuance calendar remained active as issuers sought to bring new deals to the market ahead of the Juneteenth holiday.
Over the week, the 10-year German bund yield decreased by -1bps, ending at 2.52% from 2.53% (up 15bps YTD). The 10-year UK gilt yield decreased by -1bps, ending the week at 4.54% from 4.44% (down -3bps YTD).
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Notes
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