Given the events of the weekend, discussing last week’s largely benign market conditions verges on folly but heading into Friday’s close, markets were little changed. There was even a slimmer of optimism that we could see a degree of de-escalation in the Middle East given President Trump’s comments around possible imminent negotiations with Iran. Clearly that was a misguided assumption. Wednesday’s Federal Reserve (Fed) monetary policy meeting, which saw interest rates left unchanged for a fourth consecutive meeting as widely expected, was where many investors were focused with the Fed signalling two rate cuts before the end of 2025. There have been emerging signs of strain in the US economy recently, but uncertainty about the impact of tariffs on inflation has led the Fed to hold off on further policy easing, much to the White House’s frustration. The S&P500 concluded last week -0.2% lower in dollar terms with the yield on the 10-year Treasury declining by 3 basis points (bps) to 4.37%.

The Bank of England (BoE) also held rates at last week’s Monetary Policy Committee (MPC) meeting with Governor Andrew Bailey reiterating that whilst they remain on a downward trajectory, the Bank would remain “gradual and careful” in its strategy. The FTSE100 shed -0.9% whilst the mid-cap focused FTSE250 declined by -0.1%. The recent strength in sterling has been a headwind to the former given the bulk of FTSE100 earnings are generated overseas. It has been supportive of the latter however, given the domestic orientated natures of the companies listed on the index. Moving to the Continent, the MSCI Europe ex UK index fell by -1.6% (local currency) which French and German bourses labouring. Meanwhile in Asia, returns were mixed with the Nikkei 225 in Japan adding +1.5% whilst the Shanghai Composite in China retreated by -0.5% (both local currency). Chinese stocks faced some selling pressure after economic data showed weaker industrial output last month, albeit the latest retail sales print revealed an acceleration in activity.

Regarding commodities, unsurprisingly oil continued to trend higher with Brent Crude jumping +3.5% to $77 a barrel. It’s worth noting that we have seen a further surge in prices overnight following the US attacks on Iranian nuclear facilities over the weekend with Brent briefly going beyond the $80 threshold before paring some of those gains this morning. Profit taking prompted gold to pull back slightly with the precious metal retreating by -1.7% to $3,368 an ounce. Despite that, it has still risen by nearly +11.0% over the course of the past three months.

Week Ahead

Source: Workspace DataStream, 23/06/2025

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