Introduction

Global markets demonstrated resilience in June , closing the quarter on a cautiously optimistic note. While geopolitical tensions and trade policy uncertainties loomed over the investment landscape, robust corporate earnings, easing inflation in key economies, and accommodative central bank stances helped sustain risk appetite. Equities outperformed across most regions, commodities saw mixed movements, and fixed income markets reflected shifting macroeconomic expectations. Currency markets, meanwhile, responded to diverging monetary policy signals and capital flows.

United States

U.S. markets closed out June with cautious optimism, as macroeconomic indicators showed signs of softening inflation and resilient labor markets. The S&P 500 posted modest gains of 1.4% for the month, with tech and communication services outperforming. The Federal Reserve held rates steady at 5.25% during its June meeting but signaled that a potential rate cut before year-end remains contingent on sustained inflation moderation. Core PCE inflation dipped to 2.6% year-on-year, down from 2.8% in May, reinforcing market expectations of a dovish pivot in Q4.

Consumer confidence improved slightly, but capital expenditure growth has decelerated, suggesting corporate caution amid tighter credit conditions. Meanwhile, the housing market showed signs of stabilisation, though affordability remains constrained by high mortgage rates.

Europe

European equities posted mixed results in June, as persistent inflation and sluggish GDP growth continued to challenge policymakers. The Euro Stoxx 50 rose 0.6% for the month, with defensive sectors like healthcare and utilities outperforming. The European Central Bank maintained its policy rate at 4.25%, but hawkish statements from several governing council members hinted at a "higher-for-longer" stance.

Germany's economy showed signs of stagnation, with Q2 GDP estimates flat, while France and Spain managed modest growth. Inflation across the eurozone remains elevated at 3.1%, driven by services and energy prices, complicating the ECB's ability to stimulate growth without compromising price stability.

Asia-Pacific

Asian markets ended June mostly higher, supported by improving data from China and stable performance from the region's exporters. China's industrial production grew 5.2% year-on-year in May, its fastest pace since September 2023, while the People's Bank of China refrained from further monetary easing. Chinese equities rose 3.8% in June, buoyed by a rebound in property-linked stocks and local government infrastructure spending.

Japan's Nikkei 225 extended gains, rising 2.1% as the yen continued to depreciate against the U.S. dollar, further enhancing export competitiveness. However, inflation remained subdued at 1.5%, well below the Bank of Japan's target, keeping monetary policy accommodative.

Emerging Markets

Emerging market equities saw broad-based strength in June, with the MSCI EM Index advancing 3.5%, led by gains in Latin America and Southeast Asia. Brazil's central bank cut its benchmark rate to 9.75%, spurring investor enthusiasm. Meanwhile, India reported better-than-expected GDP growth at 6.8% annualised in Q1 2025, helping the Nifty 50 index rise 4.4% in the month.

Currency volatility remained a challenge in several frontier markets, particularly in Africa, where capital outflows and local inflation pressures persist. However, global risk sentiment remained broadly constructive, with EM debt markets seeing renewed interest amid expectations of a Fed pivot.

Commodities

Commodity markets were broadly stable in June. Brent crude oil hovered around $84 per barrel, with concerns about global growth offset by continued OPEC+ supply constraints. Gold prices remained flat at $2,360/oz, as lower real yields supported bullion amid mild inflation prints.

Industrial metals like copper and lithium saw modest gains, reflecting improved Chinese demand and supply-side constraints. Agricultural commodities were mixed, with wheat prices falling due to higher global inventories, while cocoa surged on supply issues in West Africa.

Fixed Income & Currencies

Bond markets reacted positively to softening inflation data. U.S. 10-year Treasury yields fell 18 basis points to 4.06%, their lowest level since February. European sovereign bonds rallied as well, particularly in the periphery. Credit spreads narrowed modestly across investment-grade and high-yield markets.

Currency markets remained relatively stable. The dollar index (DXY) weakened slightly on dovish Fed signals, while the euro and yen made modest gains. Emerging market currencies strengthened overall, supported by a risk-on tone and higher carry returns.

Outlook

Heading into Q3, investor sentiment remains cautiously constructive. The global disinflation trend, resilient U.S. labor markets, and China's stabilising recovery provide a supportive backdrop for risk assets. However, geopolitical tensions, rate policy uncertainties, and the potential for uneven growth across regions continue to warrant close monitoring.

Brightness Capital & Asset Advisory maintains a balanced stance - favouring quality equities, selectively positioned in emerging markets, and maintaining exposure to investment-grade fixed income as a stabilising core. Sector-wise, we maintain a constructive view on technology, infrastructure, and energy transition-linked assets.