June 2025: Monthly market update

Markets rallied in May after the US and China agreed to suspend tariffs for 90 days, easing fears of a prolonged slowdown. The truce marked a significant de-escalation in trade tensions and helped lift global sentiment. US stocks rebounded strongly, recovering losses from President Trump’s “Liberation Day” tariffs, supported by robust corporate earnings and better-than-expected retail and manufacturing data. European indices also gained, helped by solid first-quarter results and easing trade concerns. The FTSE 100 hit a two-month high, with energy and financial stocks among the strongest performers. Asian shares rose after China’s central bank cut interest rates and injected liquidity to support businesses hit by weaker exports.

The UK economy grew 0.7% in the first quarter – the fastest pace in a year – helped by resilient consumer spending and a rise in business investment. New trade deals with the EU, US and India focused on tariff cuts, improved market access and closer international cooperation. Inflation rose to 3.5% in April, mainly due to higher energy and transport costs. In response, the Bank of England cut interest rates to 4.25% to help support the economy as living costs continue to rise. Although unemployment edged up to 4.5% and job vacancies fell, consumer confidence improved, turning positive for the first time in five months. This shift suggests households are starting to feel more optimistic about the economic outlook.

European stocks gained after the US delayed new tariffs on EU imports until July. The eurozone economy grew 0.4% in the first three months of the year, which is double the previous quarter, as firms rushed shipments ahead of expected tariffs. Eurozone inflation held at 2.2% in April, slightly above the European Central Bank’s target. The ECB cut rates for the third time this year and signalled more easing may follow in June as trade uncertainty clouds the outlook.