Monthly Review and Outlook June 2025
June was another positive month for global markets, with equities and corporate bonds showing resilience despite geopolitical tensions. Investor sentiment remained upbeat, supported by stable economic indicators, easing monetary policy in Europe, and progress in US-China trade talks.
Below is a review of key developments across global markets and our outlook for the months ahead, highlighting opportunities and potential risks.
Company shares
Global stock markets advanced in June, shrugging off concerns about conflict in the Middle East. A ceasefire between Israel and Iran helped calm investor nerves, while optimism around trade negotiations and monetary policy supported gains.
- United States: US shares posted strong gains, led by information technology and communication services. Most sectors advanced, although consumer staples declined, reflecting shifting consumer trends and pricing pressures.
- Europe: Eurozone shares fell slightly in euro terms. Consumer discretionary and staples were the weakest sectors, while energy outperformed. The European Central Bank cut interest rates by 25 basis points and signalled that the rate-cutting cycle is nearing its end, which may support future growth.
- United Kingdom: UK shares edged higher, with industrials, telecommunications, and energy leading the way. Healthcare stocks declined, weighed down by pressure on pharmaceutical companies.
- Japan: Japanese equities rose, supported by the Bank of Japan’s decision to maintain interest rates and its announcement to slow the pace of bond purchase reductions next year. This signalled continued support for the economy.
- Emerging Markets: EM equities outperformed developed markets, buoyed by a softer US dollar and optimism around US-China trade talks. Korea, Turkey, and Taiwan were standout performers, while Southeast Asian markets like Indonesia, Thailand, and the Philippines lagged.
Bonds
Bond markets were mixed in June, with geopolitical tensions and central bank actions influencing yields.
- US Bonds: US Treasuries outperformed, with yields falling across the curve. Investors sought safety amid global uncertainty, and stable economic data supported bond prices.
- UK Bonds: UK gilts also performed well, with falling yields reflecting investor confidence in the country’s fiscal stability.
- European Bonds: German Bund yields rose slightly, driven by increased defence spending across the region. However, euro-denominated corporate bonds outperformed government bonds, supported by easing fiscal policy.
- Corporate Bonds: Credit markets remained resilient. Investment grade (IG) risk premium contracted across the US, UK, and Europe, outperforming government bonds. High yield corporates outperformed IG in both the eurozone and US, reflecting renewed risk appetite. UK high yield lagged slightly but still outperformed gilts.
Commodities
Commodity prices rose in June, largely driven by strength in the energy sector amid heightened conflict risk in the Middle East. However, oil prices remained relatively contained due to ongoing oversupply. Agricultural commodities weakened, reflecting seasonal patterns and supply-related factors.
Outlook
The ceasefire in the Middle East and progress in trade negotiations between the US and China have helped reduce geopolitical risk and support investor confidence. We continue to forecast stable global growth, with opportunities emerging in regions and sectors benefiting from monetary easing and fiscal support.
We remain positive on global equities, particularly in Emerging Markets, where monetary policy remains supportive. The US technology and financial sectors also offer attractive prospects. In Europe, the end of the rate-cutting cycle may shift focus to fiscal stimulus, which could boost growth.
We are relatively cautious on government bonds, especially in the US and UK, where yields have fallen. Corporate bonds continue to offer better value, particularly in high yield segments.
Gold remains a useful hedge against inflation and geopolitical risk, especially with continued demand from China and the potential for lower interest rates globally.
Asset overview
Our general view of assets in the coming months is summarised as follows. These are our in-house views as at the end of June 2025.
| Asset | RAG Status | Details |
|---|---|---|
Equities | Green | Despite ongoing economic uncertainties and US tariff concerns, trade developments have been relatively favourable compared to expectations around “Liberation Day.” As a result, our stance on equities remains positive, with a view that recession risks this year have diminished. We have broadened our exposure across US, European, and Emerging Market equities. The preference for US Financials continues, while the previous cautious stance on Energy has been closed. In its place, there is now a tilt towards US Healthcare over Consumer Staples. |
Government bonds | Red | We have reduced our exposure to sovereign bonds by selling US 10-year Treasuries. This helps to fund our broader positive outlook on equities. |
Corporate bonds | Amber | We maintain a neutral stance on corporate bonds. |
Commodities | Green | We retain a positive stance on commodities, primarily through gold. However, the allocation has been trimmed to lock in gains. Gold continues to serve as a diversifying hedge against inflation and geopolitical risk. |
Source: Schroder Investment Management and Schroders Personal Wealth, 2 July 2025.
RAG Status legend
Green - Positive outlook
Red - Negative outlook
Amber - Neutral outlook
Important information
Forecasts of future performance are not a reliable guide to actual results, neither is past performance a reliable indicator of future results. The value of investments and the income from them can fall as well as rise and are not guaranteed, and the investor might not get back their initial investment.
Any views expressed are our in-house views as at end-June 2025. Investment markets and conditions can change rapidly, and the views expressed should not be taken as statements of fact nor relied upon when making investment decisions. This content may not be used, copied, quoted, circulated or otherwise disclosed (in whole or in part) without our prior written consent.
Schroders Investment Management (SIM) provides investment management and advice services for SPW funds and portfolios respectively.
Schroders Personal Wealth (ACD) is a trading name of Scottish Widows Schroder Personal Wealth (ACD) Limited. Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 11722973. Authorised and regulated by the Financial Conduct Authority number 834833.
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