Executive Summary

Global financial markets advanced during June 2025 as improving trade relations, resilient corporate earnings and continued enthusiasm surrounding artificial intelligence outweighed a significant escalation in Middle East geopolitical risk. US equities led the advance and returned to record levels, while government bonds produced more mixed results.

The United States and China held further trade negotiations in London and reached a framework intended to implement the tariff truce agreed during May. The discussions addressed issues including rare-earth exports and access to advanced technology, reducing immediate concern that trade relations would deteriorate again once the temporary tariff arrangements expired.

The S&P 500 gained approximately 5% during June and reached fresh record highs, while technology and communication-services companies again delivered strong performance. Global equities also advanced despite considerable geopolitical uncertainty.

The Federal Reserve maintained its target range at 4.25% - 4.50%. Policymakers continued to describe economic activity as expanding at a solid pace, while inflation remained somewhat elevated.

The European Central Bank reduced its three policy rates by 25 basis points. The deposit facility rate fell to 2.00%, extending an easing cycle that had substantially reduced borrowing costs across the eurozone since 2024.

The Bank of England maintained Bank Rate at 4.25% by a 6 - 3 vote. Three Monetary Policy Committee members preferred an immediate reduction to 4.00%, highlighting increasing support for further easing as UK growth remained subdued.

Geopolitical risk increased dramatically after Israel launched strikes against Iranian nuclear and military facilities on 13 June. Iran responded with missile attacks, and the United States subsequently struck three Iranian nuclear sites. Oil prices rose sharply before retreating after a ceasefire reduced the immediate risk of a broader regional war.

Key Themes During June

• US equities returned to record highs.
• The US and China reached a framework to implement their trade truce.
• The Federal Reserve maintained rates at 4.25% - 4.50%.
• The ECB reduced its deposit rate to 2.00%.
• The Bank of England held Bank Rate at 4.25%.
• Israel and Iran entered a direct military conflict.
• US forces struck Iranian nuclear facilities before a ceasefire was reached.
• Oil prices experienced sharp but temporary gains.
• AI and semiconductor shares regained strong market leadership.
• Private-market transaction confidence continued to recover.

Global Economic Overview

The global economy remained resilient during June, although trade policy and geopolitical developments continued to create significant uncertainty. The United States maintained comparatively strong economic momentum, while Europe benefited from declining interest rates and China continued using policy support to strengthen domestic demand.

United States

US economic activity continued to expand at a solid pace, according to the Federal Reserve. Labour-market conditions remained broadly healthy and unemployment stayed low, although hiring momentum had moderated relative to earlier stages of the cycle.

Inflation remained above the Federal Reserve's objective, but the absence of an immediate acceleration following the tariff increases allowed policymakers to maintain their wait-and-see approach.

Federal Reserve

The Federal Reserve left its target range unchanged at 4.25% - 4.50% at its 17 - 18 June meeting. Policymakers remained cautious about reducing rates while the ultimate inflationary effect of tariffs remained uncertain.

Markets continued to anticipate possible easing later in the year, particularly if employment weakened or tariff-related inflation proved less persistent than feared.

US - China Trade Relations

Negotiators from the United States and China met in London and agreed a framework for implementing the Geneva trade agreement reached in May. The talks addressed access to rare-earth materials and technology restrictions.

The framework reduced immediate trade-war risk but did not resolve the broader strategic competition between the two economies.

Eurozone

The ECB reduced its policy rates by another quarter percentage point on 5 June. The deposit facility rate fell to 2.00%, the main refinancing rate to 2.15% and the marginal lending rate to 2.40%.

Inflation had moved close to target, while growth remained modest. Policymakers nevertheless became increasingly cautious about the need for additional reductions after the substantial easing already delivered.

United Kingdom

The Bank of England maintained Bank Rate at 4.25%. Six policymakers supported no change while three preferred an immediate quarter-point reduction.

UK growth remained subdued, while higher employer taxes, wage pressure and regulated-price increases complicated the inflation outlook.

China

China continued using monetary and fiscal support to stabilise domestic growth. Property remained a weakness, while manufacturing exports and technology investment provided greater resilience.

Reduced trade tension with the United States provided temporary relief for exporters, although structural disputes surrounding semiconductors, critical minerals and industrial policy remained unresolved.

Japan

Japan continued moving gradually away from ultra-loose monetary policy. The Bank of Japan maintained its policy rate while monitoring wage growth, inflation and the effect of US trade policy on exports.

Middle East

Israel's strikes on Iranian facilities on 13 June produced the most serious direct confrontation between the two countries to date. Brent crude rose by approximately $5 per barrel immediately after the initial attacks.

The United States later attacked Iranian nuclear facilities before President Trump announced a ceasefire. Markets interpreted the de-escalation as reducing the probability of disruption to oil flows through the Strait of Hormuz.

Equity Markets

Global equities advanced strongly during June despite geopolitical disruption. The MSCI World Index gained approximately 2.7% in sterling terms, while US equities rose by around 5%.

United States

The S&P 500 rose approximately 5% and returned to record territory. The Nasdaq also performed strongly as semiconductor, software and communication-services companies benefited from continuing artificial-intelligence investment.

Investors increasingly concluded that the April tariff shock had not produced the immediate collapse in corporate earnings originally feared.

Technology and Semiconductors

AI-related shares regained leadership. Demand remained strong for advanced processors, networking equipment, data-centre infrastructure and high-bandwidth memory.

Cloud providers continued spending heavily on infrastructure despite questions concerning the eventual return on invested capital.

Europe

Eurozone equities were weaker than US shares during June, with one contemporary market report recording a local-currency decline of approximately 0.7%. The ECB rate cut supported domestic sectors, while exporters remained sensitive to tariff uncertainty.

United Kingdom

UK equities were broadly stable, rising approximately 0.2% in local currency according to one June market report. Financials and defensive businesses provided support, while energy markets experienced considerable volatility.

Japan

Japanese equities advanced as trade concerns moderated and technology shares participated in the global rally. Exporters remained sensitive to yen movements and US tariff negotiations.

China and Hong Kong

Chinese and Hong Kong equities benefited from improved US - China relations and continuing enthusiasm surrounding domestic technology development.

Emerging Markets

Emerging markets generally benefited from improved global risk appetite and a relatively softer dollar. Commodity exporters experienced greater volatility during the Israel - Iran conflict.

Indicative June Performance

Fixed Income Markets

Government bonds produced mixed returns as investors balanced geopolitical risk, central-bank policy and improving global growth sentiment.

US Treasuries

US Treasury yields declined modestly during parts of June as investors sought safety during the Israel - Iran conflict and continued to anticipate possible Federal Reserve reductions later in the year.

Fiscal deficits and Treasury issuance continued to place upward pressure on longer maturities.

European Government Bonds

Eurozone government yields were broadly stable to slightly higher despite the ECB reduction. German fiscal expansion and increased defence spending raised expectations of greater bond issuance.

UK Gilts

UK government-bond yields declined during the month as the Bank of England's 6 - 3 vote revealed substantial support for another interest-rate cut.

Corporate Credit

Credit markets remained constructive. Investment-grade and high-yield spreads reflected reduced trade-war risk and resilient corporate fundamentals.

Private Credit

Private-credit activity remained strong as sponsors resumed acquisition and refinancing transactions. Competition between banks and direct lenders continued to improve pricing for high-quality borrowers.

Foreign Exchange

Currency markets were influenced by central-bank divergence, trade negotiations and geopolitical risk.

US Dollar

The dollar remained under pressure compared with its early-2025 levels as markets continued to question the US fiscal outlook and anticipate eventual Federal Reserve easing.

Euro

The euro remained resilient despite another ECB cut, supported by increased European fiscal expenditure and reduced concern about an immediate global trade war.

Sterling

Sterling remained comparatively firm even as expectations of another Bank of England cut increased.

Japanese Yen

The yen strengthened temporarily during the Middle East risk-off period before surrendering part of its gain as markets stabilised.

Chinese Renminbi

The renminbi benefited from improved trade relations but remained constrained by domestic monetary support and weak property activity.

Commodities

Energy markets experienced substantial volatility during June, while precious and industrial metals reacted to geopolitical and trade developments.

Oil and Energy

Brent crude jumped after Israel attacked Iranian nuclear and military facilities on 13 June, initially rising by approximately $5 per barrel to around $74.

Prices subsequently traded above $75 during the conflict before declining rapidly after military escalation appeared contained and a ceasefire was announced.

OPEC+ plans to restore additional production remained a medium-term headwind for prices.

Gold

Gold benefited initially from geopolitical risk but experienced more mixed performance as equity markets remained resilient and the conflict de-escalated.

Copper and Industrial Metals

Copper remained supported by improved US - China trade sentiment and long-term demand from electricity infrastructure and data centres.

Agricultural Commodities

Agricultural markets remained sensitive to weather, tariffs and regional supply conditions.

Digital Assets

Digital assets remained near historically elevated levels during June as institutional participation and improving global risk appetite continued to support demand.

Bitcoin

Bitcoin consolidated after reaching record highs during May. Geopolitical tension produced temporary volatility, although institutional ETF demand remained an important source of support.

Ethereum

Ether remained supported by expectations of a more constructive US regulatory environment and continued growth in tokenisation and decentralised financial applications.

Institutional Adoption

Asset managers, banks and corporations continued exploring digital-asset custody, tokenised securities and treasury strategies.

Risk Considerations

• Digital assets remained sensitive to risk appetite and liquidity.
• Institutional participation did not eliminate price volatility.
• Corporate treasury strategies increased concentration risk.
• Regulatory implementation remained important.

Private Equity

Private-equity activity continued to recover during June as trade uncertainty moderated and public equity valuations strengthened.

Deal Activity

Healthcare, technology, business services, defence and infrastructure remained active areas. More stable public-market valuations improved agreement between buyers and sellers.

Financing

Debt markets remained accessible for high-quality transactions. Direct lenders competed with banks and syndicated markets, particularly for larger sponsor-backed companies.

Exits

Record US equity levels improved the potential IPO environment. Trade sales and sponsor-to-sponsor transactions also benefited from stronger confidence.

Defence and Infrastructure

European defence spending and German infrastructure investment continued to create attractive private-market opportunities across engineering, components, software and maintenance.

Secondaries

Secondary markets remained active as limited partners sought liquidity and managers used continuation vehicles to retain selected assets.

CE Global Private Equity Observations

• Improved trade visibility supported transactions.
• Financing competition increased for strong borrowers.
• Higher public valuations improved exit conditions.
• Defence and infrastructure remained important structural themes.
• Operational value creation remained more reliable than leverage expansion.

Artificial Intelligence & Technology

Artificial intelligence returned to the forefront of global equity markets during June as strong demand for computing infrastructure supported semiconductors, networking and cloud providers.

Semiconductors

Demand remained strong for advanced accelerators and high-bandwidth memory. Export restrictions affecting China continued to influence product design and international sales.

Cloud Computing

Large cloud providers continued committing substantial capital to data-centre construction and AI infrastructure.

Enterprise Adoption

Lower-cost models and improved tools encouraged wider deployment across customer support, software development, research and administration.

Electricity Infrastructure

Power availability remained one of the greatest constraints on data-centre development. Grid connections, transformers, cooling and generation attracted increasing investment.

Technology Risks

• AI capital expenditure remained exceptionally high.
• Export restrictions could restrict semiconductor sales.
• Model efficiency could alter long-term computing requirements.
• Electricity availability could delay development.
• Valuations remained sensitive to growth expectations.

Sector Spotlight

Critical Minerals and Rare-Earth Supply Chains

June's sector spotlight examines rare-earth minerals after access to Chinese supplies became a central issue within US - China trade negotiations.

Strategic Importance

Rare-earth elements are used within electric motors, defence systems, electronics, renewable-energy equipment and advanced manufacturing.

Chinese Market Position

China holds a dominant position within rare-earth processing and magnet manufacturing, giving it significant strategic influence over international supply chains.

Supply Diversification

Governments and manufacturers increasingly sought alternative mining, processing and recycling capacity within North America, Australia and Europe.

Defence Applications

Military aircraft, missiles, radar and communications equipment rely upon specialised materials, making secure access an important national-security issue.

Private-Market Opportunities

• Rare-earth processing
• Permanent-magnet manufacturing
• Critical-mineral recycling
• Mining technology
• Supply-chain traceability
• Strategic stockpile management

Investment Perspective

The strategic importance of critical minerals created a potentially durable investment cycle. Projects nevertheless required careful consideration of commodity pricing, permitting, technical execution and government support.

Regulatory Update

Trade policy, export controls and critical-mineral supply remained important regulatory themes during June.

US - China Trade Framework

The London negotiations created a framework intended to address implementation of the Geneva agreement, including questions surrounding rare-earth exports and technology restrictions.

Technology Export Controls

Companies continued monitoring restrictions on advanced processors, semiconductor equipment and sensitive technology.

Critical Minerals

Governments increased attention on domestic and allied-country supplies of rare earths and other strategic materials.

Artificial Intelligence

International companies continued implementing European AI requirements while monitoring a changing US regulatory environment.

Private Markets

Managers needed to incorporate geopolitical and supply-chain concentration into valuation and operational-risk analysis.

Compliance Priorities

• Monitor US - China trade-framework implementation.
• Review rare-earth and critical-mineral dependencies.
• Maintain technology export-control screening.
• Continue EU AI Act implementation.
• Assess geopolitical concentration within supply chains.
• Maintain independent private-asset valuations.

Looking Ahead

Markets entered July with US equities at record levels, reduced immediate trade-war risk and continued uncertainty surrounding tariffs, fiscal policy and geopolitics.

Federal Reserve

Employment and inflation would determine whether the Federal Reserve could begin reducing rates later in 2025. Policymakers remained cautious while tariff effects were still developing.

European Central Bank

After reducing its deposit rate to 2.00%, the ECB appeared increasingly close to the end of its easing cycle. Future action would depend upon inflation and growth.

Bank of England

The 6 - 3 June vote suggested another reduction could occur later in the summer if inflation and wages moderated.

Trade Negotiations

The implementation of the US - China framework and negotiations with other trading partners would remain major market drivers.

Middle East

The durability of the Israel - Iran ceasefire would be closely monitored. Renewed conflict could affect oil prices and inflation rapidly.

Corporate Earnings

Second-quarter results would test whether record US equity valuations remained supported by earnings growth. AI expenditure and tariff costs would remain important themes.

Private Markets

Improved public markets and financing conditions could support transactions and exits, although entry valuations required discipline.

CE Global Private Equity Perspective

June demonstrated that financial markets could absorb substantial geopolitical shocks where the disruption to global energy and trade remained limited. The rapid reversal in oil following the Middle East ceasefire reinforced the importance of avoiding investment decisions based solely upon short-term geopolitical headlines.

Artificial intelligence, defence, infrastructure and critical-mineral supply chains continued to offer attractive structural growth opportunities.

CE Global Private Equity believes that businesses providing essential infrastructure, specialised technology, supply-chain resilience and recurring services remain particularly attractive in an environment of geopolitical fragmentation.

Strong public markets provide improved exit opportunities, but elevated valuations require disciplined entry pricing and conservative leverage.

This market review is provided for general information and discussion purposes only. It does not constitute investment, legal, tax or other professional advice, nor an offer or solicitation to purchase or sell any security, financial instrument or investment product. Market values can rise or fall, and past performance is not a reliable indicator of future results.