June 2025 marked a remarkable recovery for US equity markets, capping off an exceptional second  quarter despite earlier volatility triggered by tariff uncertainties. The month was characterized by  record-breaking highs, declining bond yields, mixed commodity performance, and divergent  cryptocurrency trends. International markets showed varied performance, with Japan leading  gains while European and Chinese markets faced headwinds. 

US Equity Markets: Strong Recovery 

Exceptional Q2 Performance 

US equity markets delivered outstanding returns in the second quarter of 2025, with major indices posting their best quarterly performance in over a year. The S&P 500 gained 10.57% for the quarter, while the Nasdaq Composite surged to 17.75%, marking its strongest quarterly showing since 2023. The Dow Jones Industrial Average advanced 4.98%, and the Russell 2000 small-cap index rose 8.28%. 

Figure 1 US equity indices performance in Q2 2025, with Nasdaq leading gains at 17.75% 

June Market Dynamics

The month began with cautious optimism as markets recovered from the April lows triggered by  President Trump’s initial tariff announcements. Large-cap stocks (S&P 500) rose 6.3% in June,  outperforming small-caps (Russell 2000) which gained 5.3%. Technology stocks were the  standout performers, with the “Magnificent 7” stocks collectively returning 13.5% in May and  continuing their momentum through June. 

The S&P 500 reached new record highs on June 27, 2025, closing at 6,173.07, marking the first  record high since February 19, 2025. Similarly, the Nasdaq Composite achieved record levels,  benefiting from renewed artificial intelligence optimism and easing trade tensions. 

Key Market Drivers 

Several factors contributed to the robust equity performance: 

• Trade tension de-escalation: The 90-day tariff reduction agreement between the US and  China provided significant relief 

• Corporate earnings strength: First-quarter financial results and forward guidance exceeded  expectations 

• Technology sector leadership: AI-related stocks drove much of the market gains 

• Reduced market volatility: VIX declined to 16.3 by June 27, down from 19.8 at the week’s  start 

Fixed Income Markets: Yield Curve Dynamics 

Treasury Yield Movements 

The US Treasury market experienced notable movements in June 2025, with yields generally  declining as investors sought safety amid geopolitical uncertainties and expectations for potential  Federal Reserve policy adjustments.

Figure 2 10-Year US Treasury yields declined through June 2025, ending near 4.29% 

Key yield changes for June 2025: 

• 10-Year Treasury: Ended at 4.29%, down from 4.41% at the start of May • 2-Year Treasury: Declined to 3.30%, showing the steepest drop of 65 basis points • 30-Year Treasury: Closed at 4.85%, down 4 basis points 

Federal Reserve Policy 

The Federal Reserve maintained its federal funds rate at 4.25-4.50% during its June meeting,  marking the fourth consecutive meeting without change. The central bank emphasized its cautious  approach amid elevated inflation expectations and tariff-related uncertainties. Fed officials  projected two rate cuts by the end of 2025, though with reduced confidence compared to earlier  projections. 

Bond Market Performance

The Bloomberg U.S. Aggregate Bond Index declined 0.70% in May as longer-term rates initially  rose, though the trend reversed through June as yields fell. The bond market reflected investors’  concerns about economic growth prospects and the potential impact of trade policies on inflation. 

Commodities: Mixed Performance Amid Geopolitical Shifts 

Energy Markets 

Crude oil experienced significant volatility throughout June 2025, influenced by Middle East  geopolitical tensions and subsequent de-escalation. 

Oil price performance: 

• WTI Crude: Rose 7.48% in June, from $62.02 on June 1st to $66.66 on June 30th • Brent Crude: Settled at $67.77 per barrel, up 0.1% on June 27th 

The month was marked by initial spikes due to Iran-Israel tensions, followed by sharp declines as  a ceasefire agreement was announced, reducing the Middle East risk premium. 

Precious Metals 

Gold prices gained momentum in June, rising over 3% since late May due to safe-haven demand  amid geopolitical tensions. Central bank purchasing remained robust, with global central banks  adding 12 tons of gold to reserves in April and maintaining pace for 1,000 metric tons of purchases  in 2025. 

Industrial Metals 

Copper emerged as a standout performer, extending its stellar year-to-date rally to around 25%.  The metal benefited from: 

• Supply tightness: Particularly in China and Europe 

• US tariff positioning: Continued transfers of copper to the US ahead of potential tariffs • Record CME inventories: While LME and Shanghai warehouses saw outflows

Cryptocurrency Markets: Divergent Trends 

Bitcoin Dominance 

The cryptocurrency market showed stark performance divergence in the first half of 2025, with  Bitcoin (BTC) gaining 13% while most altcoins suffered significant losses. Bitcoin reached new  all-time highs exceeding $107,000 in June 2025, driven by ETF approval momentum. 

Figure 3 Cryptocurrency performance in H1 2025 showed mixed results with Bitcoin leading gains 

Altcoin Struggles 

Major altcoins faced substantial headwinds: 

• Ethereum (ETH): Declined 25% in the first half 

• Solana (SOL): Fell 17% during the same period 

• Smaller tokens: The OTHERS index plunged 30%

Market Capitalization and Institutional Flows 

The total cryptocurrency market capitalization reached $3.27 trillion, representing a modest  3% increase for the first half of 2025. Digital asset investment products saw $2.7 billion in  inflows in the final week of June, marking 11 consecutive weeks of inflows totaling $16.9 billion for the first half. 

Regulatory Developments 

The Digital Asset Market Clarity Act of 2025 advanced through House committees, providing a  framework for cryptocurrency regulation and dividing oversight between the SEC and CFTC. This  regulatory progress contributed to institutional confidence in the sector. 

International Markets: Regional Divergence 

China: Mixed Signals 

Chinese equity markets showed mixed performance in June 2025, with the Shanghai Composite ending at 3,452 points, up 0.21% on July 1st. The market faced challenges from: 

• Domestic vs. international sentiment divergence: A-shares and H-shares moved in  opposite directions 

• Manufacturing activity: Unexpectedly returned to expansion in June according to Caixin  PMI 

• Trade negotiations: Continued uncertainty despite framework agreements 

Europe: Modest Declines 

European markets faced headwinds in late June, with major indices closing lower on June 30th: 

• German DAX: Down 0.51% to 23,909.61 points 

• French CAC 40: Declined 0.33% to 7,665.91 points 

• UK FTSE 100: Fell 0.43% to 8,760.96 points

India: Consolidation Phase 

Indian markets showed resilience with the Sensex reaching above 84,000 for the first time since  October 2024 on June 27th, though ending June on a softer note: 

• Nifty 50: Closed at 25,517.05, down 0.47% on June 30th 

• Sensex: Ended at 83,606.46, down 0.54% 

• Sector performance: PSU Banks led gains with 2.6% rise, while realty and auto sectors  lagged 

Japan: Standout Performer 

Japanese markets were the clear winner among major international markets in June 2025: 

• Nikkei 225: Surged to 40,100, gaining 1.3% on June 30th 

• Topix Index: Rose 1.1% to 2,835 

• Key drivers: US rate cut expectations, trade optimism, and strong corporate fundamentals 

Manufacturing PMI reached 50.1 in June, marking the first expansion in 13 months, though new  orders continued to decline for the 25th consecutive month. 

Major News and Market Developments 

Trade Negotiations 

June 2025 was dominated by US-China trade discussions held in London, where senior officials  including Commerce Secretary Howard Lutnick and Chinese Vice Premier He Lifeng met to  address ongoing tensions. The talks resulted in a framework agreement maintaining current tariff  arrangements, with Trump stating the US would receive “55% tariffs” while China gets “10%”. 

Monetary Policy Developments 

The Federal Reserve’s June meeting maintained the status quo while signaling potential for two  rate cuts later in 2025. The central bank revised economic projections, lowering GDP growth  forecasts to 1.4% while raising inflation expectations to 3%.

Geopolitical Events 

The Iran-Israel ceasefire announced by President Trump significantly impacted global markets,  reducing risk premiums across energy and precious metals markets. This development contributed  to the sharp decline in oil prices and reduced demand for safe-haven assets. 

Corporate Developments 

Coinbase emerged as the best-performing stock in the S&P 500 during June, gaining 43% as  regulatory clarity improved and the company benefited from its inclusion in the benchmark index.  The cryptocurrency exchange’s performance reflected broader institutional adoption of digital  assets. 

Outlook and Implications 

June 2025’s market performance demonstrated remarkable resilience in US equities, supported by  corporate earnings strength, trade tension resolution, and technology sector leadership.  The 17.75% Nasdaq gain in Q2 highlighted the continued importance of AI and technology  innovation in driving market performance. 

Fixed income markets reflected the complex interplay between inflation concerns, Federal  Reserve policy, and economic growth expectations, with the yield curve showing signs of  normalization. Commodity markets illustrated the powerful impact of geopolitical events on  pricing, while cryptocurrency markets showed increasing institutional adoption despite  significant volatility in altcoins.