The global economic landscape in June was characterized by resilient, yet uneven, economic activity alongside growing signs of moderation in inflation. Investor sentiment remained constructive as attention shifted toward central bank guidance, corporate fundamentals, and the sustainability of economic growth rather than geopolitical developments, which continued to remain elevated but largely contained from a market perspective.
The inflation narrative continued to improve, although progress remained uneven across regions. Headline inflation generally eased as energy prices softened and supply chains remained stable, while core inflation proved more persistent, particularly within services. Markets increasingly focused on the pace of future monetary easing, with expectations converging toward gradual rather than aggressive interest rate cuts.
The month highlighted the widening divergence between major economies. The US economy continued to demonstrate relative resilience, Europe showed tentative signs of stabilization despite weak manufacturing conditions, and Asian economies benefited from improving export demand, technology investment, and targeted policy support. Investors increasingly differentiated between regions based on domestic growth dynamics and policy flexibility.
Global equity markets advanced further, with increased volatility, during June, supported by continued strength in technology, artificial intelligence, and semiconductor-related sectors. US equities again outperformed most developed markets with the added benefit of strong earnings, while Asian equities benefited from improving earnings expectations and stronger technology demand. European markets faced ongoing headwinds and posted modest gains but continued to lag amid subdued economic growth and political uncertainty in several countries.
Bond markets remained sensitive to incoming inflation data and central bank communications as expectations for central bank easing faded. Government bond yields fluctuated throughout the month but generally remained elevated by historical standards as investors adjusted expectations for the timing of policy easing. Yet, the long end of yield curves benefited from the decline in energy prices.
The US Dollar strengthened during June as markets remained reactive to shifting interest rate differentials and relative growth divergences, with the US Dollar maintaining its central role amid global volatility.
London metals and gold mostly declined due to concern about global growth and the strength of the US Dollar. In addition, aluminum suffered as fears for supply disruptions from the gulf states subsided.
Energy markets softened overall during June as oil prices faced pressure from ample supply expectations and concerns over slowing global demand growth despite ongoing geopolitical tensions. Natural gas markets remained highly regional and volatile and was primarily weather and supply dependent.
The soybean complex remained primarily driven by Northern Hemisphere weather conditions, crop development, and evolving biofuel demand expectations. The sector moved lower as markets balanced favorable crop conditions against uncertain export demand and declining oil prices.
Soft commodities delivered mixed performance. Sugar prices remained under pressure for most of the month but rebounded in late June, driven by a convergence of weather-related supply concerns and shifting production priorities among major global sugar exporters. Coffee prices stabilized and moved higher from previous declines as traders reassessed supply expectations and weather risks in key producing regions. Cocoa prices remained volatile but generally strengthened, supported by continued concerns over West African production, tight global inventories, and expectations for another season of constrained supply.
CHINA
CPI rose 0.3% YoY, falling short of analysts’ expectations of 0.4%, and decreased by 0.1% MoM, compared to the expected 0.0%
In May, China’s exports exceeded expectations by rising 7.6%, while imports increased by only 1.8%, which was less than anticipated, resulting in a higher trade balance.
The European Union has agreed to discuss the new tariffs it is considering imposing on China’s electric vehicles with China before implementing them.
The PBOC maintained its interest rate at 3.45% for the tenth consecutive month.
S&P Global and Fitch Ratings have lowered their forecast for China’s property market, expecting sales to decline annually by 15%-20%.
Onshore and Offshore Yuan have reached their lowest level against the US Dollar since the beginning of the year.
CSI 300 TR Index declined 2.83% in June, hitting its lowest point since mid-April.
Official Manufacturing PMI stayed at 49.5 for the second consecutive month.
