Weekly Market Review: 30th June 2025

In the US, markets rallied as tensions between Israel and Iran de-escalated, avoiding any disruption to shipping through the Strait of Hormuz. After nearly two weeks of intense rocket exchanges—culminating in US bunker-buster strikes on three key Iranian nuclear facilities—an agreement was reached on Monday evening. Mediated by the US and Qatar, the agreement brought an end to the hostilities. Shortly afterwards, President Trump stated that China would be permitted to purchase oil from Iran once again, following months of US-imposed restrictions on Chinese companies importing Iranian oil. He also announced that the US would hold talks with Iran in the coming week. The ongoing US-China trade dispute continues to affect the logistics sector. FedEx reported last week that freight volumes from China to the US “deteriorated sharply” in May. The China–US route currently accounts for 2.5% of FedEx’s total revenues. On the economic front, Federal Reserve Chair Jerome Powell testified before Congress, reiterating the cautious stance on interest rate cuts that has characterised many Federal Open Market Committee meetings so far in 2025. Meanwhile, the US dollar reached a three-year low on Wednesday evening, following reports that President Trump may nominate a new Federal Reserve Chair early. The dollar has weakened by over 10% this year, driven by concerns over the health of the US economy and the long-term role of the dollar as a global reserve currency. Current Chair Powell’s term ends in May 2026. In corporate news, NVIDIA shares hit a record high on Wednesday, once again making the chipmaker the most valuable company in the world. Shares surged after CEO Jensen Huang delivered an upbeat outlook at last week’s annual shareholder meeting, highlighting multitrillion-dollar opportunities in artificial intelligence. NVIDIA shares are up 14.9% year-to-date to over $150, despite having fallen below $100 in early April. For the week, both the S&P 500 and NASDAQ closed higher, up 3.24% and 4.17% respectively.

In Europe, markets also rose last week as tensions in the Middle East began to ease, following the US-brokered agreement between Israel and Iran. NATO members, with the exception of Spain, agreed to raise defence spending targets from 2% to 5% of GDP by 2035. This decision positively impacted European defence contractors, with Rheinmetall shares rising by over 3% last week. In corporate news, Spanish regulators have blocked the proposed merger between leading banks BBVA and Sabadell for at least three years. Under the current ruling, the two banks must maintain separate legal entities, assets, and management autonomy during this period before a merger can take place. BBVA must now decide whether to accept the conditions, challenge them in court, or withdraw its €11bn bid entirely. In economic news, German business sentiment improved significantly in May, with the Business Climate Index reaching its highest level in over a year, buoyed by strong manufacturing PMI data. For the week, both the Eurostoxx 50 and STOXX 600 indices closed higher, up 1.95% and 1.51% respectively.

In the UK, the FTSE 100 underperformed relative to its US and European counterparts, as falling oil prices and reduced demand for safe-haven assets dragged major commodity and mining stocks lower. Additionally, heavyweight pharmaceutical firms such as AstraZeneca and GSK posted negative returns for most of the week. On a more positive note, Babcock International became the best performing stock on the FTSE 100 YTD last week. Having only rejoined the index in March after a five-year absence, shares surged after the defence contractor raised its profit forecasts and dividend guidance for the year. The company also announced its first-ever share buyback. For the week, the FTSE 100 closed slightly ahead, up 0.35%.