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A Global Glimpse
June was a turbulent month, especially in the Middle East. Tensions rose after Israeli airstrikes targeted Iranian nuclear sites, briefly pushing oil prices higher and rattling markets. There were also concerns Iran might block the Strait of Hormuz, a vital route for global oil shipments, but thankfully that hasn’t materialised (yet).
United Kingdom: A Mixed Bag
Prime Minister Keir Starmer and Chancellor Rachel Reeves are facing political pushback, particularly over proposed disability benefit reforms. Their attempts to keep public finances in check are creating friction within their own party, and could hint at future tax changes. One possibility? A review of Lifetime ISAs and cash ISA rates.
But it’s not all doom and gloom. The UK economy grew 0.7% in Q1, the strongest result in over a year. Household spending was up, and the FTSE 100 hit a record closing high of 8,884.92 in mid-June.
That said, growth is expected to slow in Q2, and unemployment is creeping up, whether this is temporary or something more lasting isn’t clear yet. The Bank of England held its base rate steady at 4.25%.
One concern? The lack of new businesses going public. Only five UK companies listed in early 2025 – a symptom of wider economic uncertainty.
United States: Markets Rise, but Uncertainty Lingers
Trade tensions under President Trump continue to affect global confidence. Some of the tariffs he’s introduced have been blocked in court, but don’t expect that to stop him. His administration is finding workarounds, and in June, tariffs on steel and aluminium imports were doubled.
The next big moment comes on 9th July, when a “pause” in reciprocal tariffs ends. Investors are on edge, wondering whether another wave of trade retaliation could follow.
Meanwhile, the US dollar has been slipping. One reason? America’s growing national debt. A new spending bill nicknamed the ‘Big Beautiful Bill’ is set to add another $3.3 trillion to the already eye-watering $36 trillion debt pile.
The US central bank (the Federal Reserve) kept interest rates steady at 4.25%-4.5% in June. They signalled possible rate cuts later this year, which is good news for borrowers, as inflation begins to cool. However Fed Chair Jerome Powell was cautious, saying they’re “well-positioned to wait” and watch how the economy unfolds.
And just next door, Canada rolled back a tax on big tech companies to help ease trade negotiations with the US – another sign that diplomacy isn’t off the table.
Europe: Finding Strength in Uncertainty
European defence stocks surged nearly 70% in the first half of 2025. With the US stepping back from its traditional NATO role, countries like Germany are spending more on their own defence, even changing long-standing borrowing rules to do so.
Inflation across the Eurozone ticked up slightly to 2%, right on target for the European Central Bank.
There’s also growing confidence in European assets. As worries mount about the US, investors are turning to safer places like German government bonds. Meanwhile, a weaker dollar has helped boost European equity markets.
Still, Europe isn’t without challenges. Germany (the region’s economic engine) continues to wrestle with its reliance on exports, job losses, and rising corporate debt.
Far East: Signs of Struggle
China’s manufacturing sector shrank for the third straight month in June. While leaders in Beijing remain optimistic about hitting a 5% growth target, many economists are sceptical. China may need to slow down and shift from export-led growth to a more sustainable, consumer-driven model.
Japan’s manufacturing picked up by 0.5% in May, but the full effects of US tariffs have yet to be felt. The Bank of Japan kept rates steady at 0.5%.
Emerging Markets: A Hidden Opportunity?
The term “emerging markets” covers a lot – from fast-growing India to struggling Turkey. What’s clear is that some of these countries are adapting well. A weaker US dollar has opened up new opportunities, and capital is flowing in.
Global investment giant PIMCO even called this a “Goldilocks moment” for emerging markets as countries like India and Argentina show strength.
Final Thoughts: Staying the Course
Despite all the headlines, many investment portfolios are quietly recovering from the wobble we saw back in April. It’s a reminder that sticking to your long-term plan, even when the news feels chaotic, can pay off.
There’s still a lot of 2025 ahead. But the recent cooperation between Canada and the US suggests that behind the scenes, world leaders are looking for common ground. July could bring more surprises, but maybe not the dramatic shocks we saw earlier in the year. If you’re concerned about how any of these changes will impact your long-term financial plan, feel free to book a power-hour for peace of mind.