Global Markets Rally on Easing Tensions and Rate Cut Hopes: A Weekly Review for June 27, 2025

Global equity markets posted a powerful and broad-based rally in the week ending June 27, 2025, with several major indices in the United States, Europe, and Asia reaching record or multi-year highs. The surge was propelled by a significant “risk-on” shift in investor sentiment, ignited by a potent dual catalyst: the de-escalation of geopolitical tensions and growing optimism surrounding international trade agreements. A ceasefire between Iran and Israel, coupled with constructive dialogue between the U.S. and its key trading partners, China and the European Union, allowed a significant geopolitical risk premium to evaporate from the market. This was most clearly observed in commodity markets, where safe-haven assets like gold and oil retreated while industrial metals surged.

This improved global backdrop allowed the market’s underlying focus on future central bank easing, particularly from the U.S. Federal Reserve, to reassert itself as a dominant bullish force. Despite the Fed holding rates steady, market participants aggressively priced in rate cuts for later in the year, a narrative supported by weakening U.S. economic data. However, this rally occurred against a backdrop of mixed and, in some cases, deteriorating economic fundamentals. A notable divergence emerged between soaring asset prices and the on-the-ground reality of a contracting U.S. economy and slowing industrial activity in China. This report details the outperformance of European and Indian markets, which benefited from their own policy tailwinds and strong capital inflows; the tech-led surge in the U.S. and Japan; the starkly contrasting fortunes of mainland China and Hong Kong; and the commodity market’s clear reaction to the week’s pivotal events.

The Global Macroeconomic & Geopolitical Landscape

The primary driver of market action this week was a dramatic reduction in perceived tail risk, which unlocked investor appetite for equities and other risk assets. This shift was rooted in positive developments on both the geopolitical and trade fronts, allowing a pre-existing narrative of impending central bank rate cuts to return to the forefront.

The Great De-escalation: A Dual Catalyst for a Global Rally

A palpable sense of relief swept through global markets as two major sources of uncertainty showed signs of resolution. This de-escalation was the key catalyst that allowed investors to shift their focus from risk mitigation to growth opportunities.

First, the announcement of a ceasefire between Iran and Israel had a profound impact, significantly reducing the immediate threat of a wider conflict in the Middle East.¹ This development was a classic “sell the fact” event for certain sectors, such as defence stocks, which had rallied on the initial tensions.¹ For the broader market, however, it removed a significant layer of geopolitical risk that had been weighing on sentiment and contributing to volatility.⁴

Second, and equally important, was a wave of optimism on the global trade front. Sentiment was bolstered by reports that the European Union and the United States were moving closer to a trade agreement, with European Commission President Ursula von der Leyen expressing confidence that a deal could be reached before key deadlines.⁷ This was particularly crucial for European markets, which are heavily reliant on exports. Adding to the positive mood, the White House downplayed the significance of a self-imposed July 9 tariff deadline, signalling flexibility and reducing fears of an imminent escalation.⁹ Simultaneously, the U.S. and China confirmed they had finalised a trade understanding reached in Geneva, with a specific focus on accelerating rare-earth exports from China in exchange for the U.S. rolling back certain countermeasures.⁹ This concrete progress, after months of friction, provided a tangible reason for investors to believe that the worst-case trade war scenarios were becoming less likely.⁷

Commodity Markets React: Risk Premiums Vanish

The shift in risk appetite was vividly reflected in commodity price movements. As fears of conflict and trade wars subsided, the risk premiums that had been built into certain assets rapidly unwound, while prices of growth-sensitive commodities strengthened.

Crude oil prices were on track for their steepest weekly decline in over a year as the easing of Middle East tensions alleviated concerns about potential supply disruptions from the critical region.⁴ Brent crude, the global benchmark, fell to trade around $68 per barrel, while West Texas Intermediate (WTI) hovered near $65.⁴ This decline in energy costs provided a direct tailwind for consumer and industrial economies globally.

Gold, the traditional safe-haven asset, also lost its lustre, falling for a second consecutive week as investors rotated out of defensive positions and into riskier assets.¹⁴ Gold prices dipped more than 1%, falling below the $3,300 per ounce level as demand for portfolio insurance waned in the face of the improving geopolitical and trade outlook.³

In stark contrast, industrial metals, which are highly sensitive to expectations of global economic activity, rallied strongly. Copper extended its impressive 2025 gains, benefiting from the positive trade news and the prospect of improved demand from manufacturing and construction sectors.¹⁴ Platinum also had a standout week, surging to its highest level in over a decade, driven by a combination of tightening supply and rising investment demand.¹¹ This clear divergence—falling prices for safe havens and rising prices for industrial commodities—served as a powerful confirmation of the market’s decisive shift toward a “risk-on” stance.

Central Banks at a Crossroads: Divergent Paths and Market Hopes

While geopolitical and trade news provided the spark, the fuel for the rally came from the persistent belief that major central banks are on a path toward monetary easing. However, the policies and messaging from these institutions remain diverse, creating a complex landscape for investors to navigate.

The U.S. Federal Reserve remained the market’s central focus. Despite holding its benchmark federal funds rate steady in the 4.25% to 4.50% range, the market has almost entirely dismissed the Fed’s cautious rhetoric on inflation.¹⁷ Investor expectations for rate cuts have become deeply entrenched. The CME FedWatch Tool, a closely watched gauge of market sentiment, indicated a 92% probability of at least one rate reduction by the September 2025 meeting.¹⁰ This hope of cheaper money in the near future has become a primary pillar supporting the U.S. equity market’s valuation, even as Fed officials themselves continue to express concern that tariffs could reignite inflation.²⁰

In Europe, the European Central Bank (ECB) has taken a more proactive approach. The ECB already initiated its easing cycle with a 25 basis point rate cut in early June, providing a clear policy tailwind for the region’s economy and markets.²³ This move has contributed to the outperformance of European equities relative to their U.S. counterparts in 2025.²⁵ Further signalling its forward-looking stance, the ECB announced a pilot program for a Digital Euro, selecting the XRP Ledger as a technology for testing, indicating a strategic focus on the future of financial infrastructure.²⁶

The Reserve Bank of India (RBI) also delivered a decisive easing move, cutting its key repo rate by a larger-than-expected 50 basis points to 5.50% at its early June meeting.²⁷ This aggressive, front-loaded cut provided a powerful stimulus for the Indian market. However, the RBI simultaneously shifted its policy stance from “accommodative” to “neutral,” a signal to the market that it may pause to assess the impact of its actions before proceeding with further cuts.²⁸

Finally, the Bank of Japan (BoJ) continued its outlier status, maintaining its ultra-low key interest rate at 0.5%.³¹ However, it took a very small step toward policy normalisation by announcing a detailed plan to gradually reduce its purchases of Japanese Government Bonds (JGBs).³¹ The central bank’s overwhelmingly dovish stance continues to exert downward pressure on the Japanese yen, which in turn provides a significant competitive advantage and profit boost for Japan’s large cohort of export-oriented companies.

The global rally, therefore, is not a simple story. It is a complex interplay of relief and expectation. The market is celebrating the removal of immediate negative threats—a wider war in the Middle East and a deepening trade conflict—which has allowed the pre-existing narrative of “impending rate cuts” to dominate investor psychology. This is happening even as fundamental economic data from the world’s two largest economies, the U.S. and China, shows clear signs of weakness.³³ The rally is thus built on a fragile premise: that bad economic news is good news for markets because it will force the Federal Reserve’s hand. This creates a significant vulnerability. Should a negative geopolitical headline re-emerge, or if stubbornly high inflation data forces the Fed to delay its anticipated cuts, the market’s primary pillar of support would be severely weakened, potentially leading to a sharp and sudden reversal.

United States: Record Highs on a Shaky Foundation

U.S. stock markets powered to new all-time highs, capping a strong week and marking a remarkable turnaround from the tariff-induced fears that caused a sharp plunge earlier in the year. The rally was broad on Friday but occurred against a backdrop of increasingly concerning economic data, creating a significant disconnect between market performance and underlying fundamentals.

Market Performance: A Week of All-Time Highs

The week culminated in a historic session on Friday, June 27, with all three major U.S. indices closing at record levels.²⁰ The S&P 500 rose 0.5% on the day to finish at 6,173.07, surpassing its previous record set in February. The Dow Jones Industrial Average gained 1% to close at 43,819.27, and the tech-heavy Nasdaq Composite added 0.5% to reach its own new peak at 20,273.46.²⁰ The market showed resilience even after President Donald Trump’s decision on Friday to halt trade talks with Canada briefly threatened the rally.²⁰

Note: Table data reflects Friday’s closing prices and changes where available. Weekly changes are calculated based on available data points from the week. Sources:.⁹

Economic Deep Dive: The “Bad News is Good News” Conundrum

The market’s ascent was particularly notable given the slew of economic data released during the week, which painted a picture of a slowing, and in some areas, contracting economy. This paradox, where negative economic news fuels positive market performance, was a defining feature of the week’s trading.

The most significant release was the final estimate for first-quarter Gross Domestic Product (GDP). The data revealed that the U.S. economy contracted at an annualised rate of 0.5%, a downward revision from the previous estimate of a 0.2% decline.³³ This marked the economy’s worst quarterly performance since the early days of the pandemic in 2023 and was driven by reduced consumer spending and exports.¹¹ Adding to the concern, corporate profits were also shown to have fallen by 3.3% in the first quarter, reversing a 5.9% jump from the prior period.³³

Inflation data presented a challenge for the Federal Reserve. The Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred measure of underlying inflation, rose by 0.2% in May, slightly hotter than the 0.1% consensus expectation.¹⁰ On an annual basis, core PCE inflation ticked up to 2.7% from 2.6%, moving further away from the central bank’s 2% target.⁹ This stickiness in inflation complicates the case for imminent rate cuts.

Further signs of weakness came from the consumer. Data for May showed that both Personal Income and Personal Spending unexpectedly fell, declining by 0.4% and 0.1% respectively.¹⁰ This raised concerns about the health and resilience of the U.S. consumer, whose spending is a primary driver of the economy. The one bright spot was the labour market, where initial jobless claims for the week came in lower than anticipated. However, this was tempered by the fact that continuing jobless claims, which track those receiving unemployment benefits for more than a week, rose to a 2.5-year high, presenting a mixed and potentially softening picture of employment.¹²

Federal Reserve Watch: Caught Between a Rock and a Hard Place

The week’s economic releases perfectly encapsulated the Federal Reserve’s current policy dilemma. The central bank, which held its key interest rate steady at 4.25-4.50% in its June meeting, is caught between slowing economic growth that argues for monetary easing and persistent core inflation that argues for maintaining a restrictive stance.¹⁷

The market, however, has clearly picked a side. Investors have interpreted the weak growth and consumer data as the more dominant factor, believing it will force the Fed to cut rates to support the economy, regardless of the inflation readings. This “bad news is good news” mentality is the primary fuel for the equity rally. Market pricing, as reflected in the CME FedWatch tool, shows overwhelming odds of at least one rate cut by September, with traders anticipating two full 25-basis-point cuts by the end of 2025.¹⁰ This aligns with the Fed’s own projections from its June “dot plot,” which also signaled two cuts this year, though officials simultaneously downgraded their growth forecasts and upgraded their inflation forecasts, underscoring their own uncertainty about the economic path forward.¹⁹

Key Sector and Stock Movers

The week’s rally saw standout performances from several key sectors and individual stocks.

Nike (NKE) was the biggest gainer in the S&P 500, soaring more than 15% for the week.²⁰ The sportswear giant’s stock surged after it issued better-than-expected guidance, suggesting that a yearlong sales slump may have finally bottomed out. Investors were also encouraged by the company’s detailed action plan to mitigate the expected impact of tariffs, which includes optimising its sourcing mix and reallocating production across different regions.⁹

The Technology and Semiconductor sectors had a banner week. An impressive 36% of the stocks within the S&P 500 Technology Select Sector Index reached new 52-week highs on Thursday.¹⁰ The enthusiasm for artificial intelligence continued to drive shares of

Nvidia (NVDA) to new record highs. Other semiconductor firms, including Broadcom (AVGO), Palantir (PLTR), and Advanced Micro Devices (AMD), also climbed, buoyed by the optimism surrounding a U.S.-China trade deal that could secure supply chains.¹⁰

In contrast, Defence Stocks experienced a “sell the fact” moment. Following the announcement of the ceasefire between Iran and Israel on Tuesday, major defence contractors like Northrop Grumman (NOC), RTX (RTX), and Lockheed Martin (LMT) all declined by over 3% as the immediate prospect of escalating conflict faded.¹

The nature of the U.S. market rally reveals a potentially dangerous narrowing of market breadth. While headline indices are at all-time highs, the advance is being driven by a select group of mega-cap technology stocks, fueled by the AI narrative and the promise of future liquidity from Federal Reserve rate cuts. This creates a significant divergence between the performance of the market-cap-weighted indices and the average stock. The equal-weighted S&P 500, which gives every company the same influence regardless of size, remains notably below its all-time high, indicating that the gains are not being shared broadly across the market.¹¹ This concentration makes the entire market structure highly susceptible to a sentiment shift. If the Fed fails to deliver on the market’s aggressive rate-cut expectations, or if any negative, company-specific news were to hit the dominant tech sector, the weak underlying economic breadth could lead to a rapid and significant correction.

Europe: Trade Optimism Fuels Market Outperformance

European stock markets delivered a stellar performance, posting their best weekly gain in over a month as a powerful combination of easing trade tensions, positive corporate news, and a supportive monetary policy backdrop propelled indices higher. The region has emerged as a leader in global equity performance for the year, attracting significant investor inflows after a long period of being overlooked.

Market Performance: Best Week in Over a Month

The pan-European STOXX 600 Index advanced 1.3% for the week, its strongest performance since mid-May.⁷ This gain puts the index on track for a 7% advance in the first half of 2025, a period during which it has outperformed its U.S. peers.⁷ The broader Euro Stoxx index has seen an even more impressive 20% surge year-to-date, marking its strongest relative start to a year since 2000.²⁵

The rally was widespread across the continent. Germany’s DAX index rose firmly, closing Friday’s session at 23,831.50.³⁸ France’s CAC 40 was a standout performer, gaining 1.78% on Friday alone to close the week at 7,691.55.³⁹ In the United Kingdom, the FTSE 100 also posted a solid weekly gain, finishing at 8,798.91.⁴¹

Note: Table data reflects closing prices from June 27 and weekly percentage changes based on available data. Sources:.⁷

Drivers of the Rally: A Perfect Storm of Positivity

The robust performance of European equities was driven by a confluence of highly positive factors that boosted investor confidence across the board.

The primary catalyst was the burgeoning optimism surrounding transatlantic trade relations. Reports that the European Union and the United States are making significant progress toward a trade agreement provided a major lift to sentiment.⁷ European Commission President Ursula von der Leyen reportedly told EU leaders she was confident a deal could be reached, easing fears of an economically damaging tariff escalation.⁷ This news was particularly beneficial for Europe’s export-heavy economy and gave a strong boost to sectors like automakers and industrial goods.

Positive corporate news from the U.S. also had a significant spillover effect. The strong results and optimistic outlook from American sportswear giant Nike provided a direct lift to its European peers. Shares of Adidas (ADS) and Puma (PUM) in Germany both rose on the news, demonstrating the tightly interconnected nature of global consumer markets.⁷ In the UK, retailer

JD Sports Fashion surged more than 6% on Friday, as analysts noted it would be a key beneficiary of renewed demand for Nike products.³⁷

This positive backdrop has fueled a dramatic reversal in investor flows. After 12 consecutive quarters of net outflows, European equity funds are now experiencing a massive wave of new investment. So far in 2025, investors have poured $46 billion into the region, putting European funds on track for their second-largest annual inflow ever.⁷ This influx of capital is providing a strong technical underpinning for the market’s rally.

Economic & Policy Backdrop: A Supportive Environment

The market’s rally is occurring within a broadly supportive, albeit not perfect, economic and policy environment. The European Central Bank’s decision to cut its key interest rate in early June provides a clear monetary tailwind that contrasts with the uncertainty surrounding the U.S. Federal Reserve’s path.²³

On the inflation front, preliminary data for June showed a slight uptick in some countries. The year-over-year inflation rate in France rose to 0.9% and in Spain it increased to 2.2%.⁴⁵ However, these modest increases are not seen as sufficient to alter the ECB’s overall view that inflation is on a sustainable path back to its 2% target, allowing the central bank to maintain its easing bias.⁷

In a familiar echo of the trend seen in the United States, however, sentiment indicators are not keeping pace with the market rally. The Eurozone Economic Sentiment Indicator for June unexpectedly fell to 94.0 from 94.8, driven primarily by reduced confidence within the industrial sector.³⁷ This disconnect suggests that while financial markets are celebrating the potential for future growth, businesses on the ground remain cautious about the current economic climate.

The sustained rally in European markets appears to represent more than just a fleeting, news-driven event; it signals a potential structural shift in global capital allocation. For years, investors have favoured the high-growth, high-valuation technology stocks of the United States, leading to a period of significant underperformance and capital outflows for European equities.²⁵ That trend now appears to be reversing decisively. The rationale for this shift is compelling: European stocks offer more attractive valuations, provide a significantly higher dividend yield (over 3% compared to roughly 1.5% in the U.S.), and the long-standing gap in corporate earnings growth between the U.S. and Europe is beginning to narrow.²⁵ Combined with a clearer and more proactive monetary policy path from the ECB, Europe is re-emerging as a compelling “value and income” destination for long-term investors. The massive inflows seen in 2025 are not just from short-term tactical traders but represent the beginning of a potential multi-year rebalancing of global portfolios, suggesting that the “lost decade” for European equities may finally be coming to an end.

Asia-Pacific: A Region of Stark Contrasts

Stock markets across the Asia-Pacific region presented a fractured and divergent picture for the week, underscoring how dominant local economic narratives and policy decisions are currently outweighing any single regional trend. While easing geopolitical tensions provided a positive backdrop for the region as a whole, the on-the-ground performance varied dramatically, from a breakout rally in Japan to persistent weakness in mainland China.

Market Performance: A Mixed Picture

Overall, Asian markets finished the week on a mixed note.²⁰ The MSCI’s broadest index of Asia-Pacific shares excluding Japan managed to touch its highest level since November 2021 and was on track for a weekly gain of nearly 3%, lifted by strong performances in markets like India.⁴ However, the headline number masked significant underlying divergences. Japan’s market soared, while mainland China’s struggled, and South Korea saw profit-taking. This varied performance highlights the importance of country-specific factors in the region.

Note: Table data reflects closing prices from June 27 and weekly percentage changes based on available data. Sources:.¹¹

Japan’s Breakout Rally: Nikkei Surges Past 40,000

The standout performer in the region was Japan. The Nikkei 225 index jumped 1.43% on Friday to close at 40,150.79, its highest closing level since January and its first finish above the key 40,000 mark in six months.¹² For the week, the index posted a massive gain of 4.55%.⁴⁶

Several factors fueled this powerful rally. A primary driver was the strong performance of technology stocks, which followed their U.S. counterparts higher. Index heavyweights like chip-making equipment manufacturer Tokyo Electron (+4.3%) and investment giant SoftBank Group (+2.5%) saw significant gains.¹² The rally was also supported by a weaker Japanese yen, which boosts the profitability of the country’s many exporters. The yen’s softness was reinforced by the Bank of Japan’s continued dovish monetary policy stance and by Tokyo inflation data for June that came in milder than anticipated.¹² Furthermore, defence-related stocks such as

Kawasaki Heavy Industries soared on growing expectations of increased government defence spending.¹²

China & Hong Kong: A Tale of Two Systems

The performance of Chinese markets provided a stark contrast, both internally and with the rest of the region.

On the mainland, markets struggled under the weight of a gloomy economic outlook. The Shanghai Composite Index fell 0.7% on Friday to close at 3,424, though it did manage to eke out a weekly gain of 1.91% thanks to earlier strength.³⁴ Investor sentiment was dampened by the release of new data showing that industrial profits in China plunged 9.1% year-on-year in May. This was the sharpest decline in seven months and served as a stark reminder of the country’s persistent challenges, including deflationary pressures and a deep, ongoing crisis in the property sector.¹²

In a completely different story, Hong Kong’s Hang Seng Index surged, rising 3.20% for the week in its largest weekly advance since March.⁴⁸ On a year-to-date basis, the Hang Seng is now up an impressive 21%, significantly outperforming its mainland counterpart.⁴⁸ This rally has been driven by a combination of factors, including its heavier weighting toward global technology companies, which are benefiting from the AI-driven rally, and a recovering IPO pipeline that is attracting fresh capital.⁴⁹

South Korea

In South Korea, the KOSPI index fell for a second consecutive session on Friday, ending the week lower. The decline was largely attributed to profit-taking by investors, particularly in the battery and automotive sectors, which had seen strong gains in previous weeks.¹²

The dramatic outperformance of Hong Kong’s Hang Seng index relative to mainland China’s Shanghai Composite is not the bullish signal for the region that it might appear to be at first glance. A deeper look at capital flows reveals a more cautionary tale. The rally in Hong Kong is not being driven by a wave of renewed confidence from foreign institutional investors, who remain largely on the sidelines, scarred by past drawdowns and ongoing geopolitical uncertainty.⁴⁹ Instead, the data indicates that the surge is being fueled primarily by mainland Chinese capital flowing south into the Hong Kong market via the Stock Connect program.⁴⁹ This movement is less a vote of confidence in China’s overall prospects and more a reflection of mounting concern about the domestic mainland economy. With mainland industrial profits falling sharply and the property sector mired in crisis, mainland investors are looking outward for better returns and diversification.³⁴ Hong Kong’s market, with its global tech listings and more open capital structure, offers a compelling alternative. Therefore, the Hang Seng’s rally can be interpreted as a symptom of capital flight and a lack of confidence in the mainland’s economic recovery, representing a tactical rotation by domestic investors rather than a structural vote of confidence in China from the global community.

India: A Resurgent Market Fired by Domestic and Global Tailwinds

Indian equity markets delivered a powerful performance, closing the week with their best gains in six weeks. The rally was broad-based and driven by a potent combination of resurgent foreign capital inflows, a favourable global macroeconomic backdrop, and enduring confidence in the country’s strong domestic growth story.

Market Performance: Best Week in Six

India’s benchmark indices both climbed over 2% for the week, marking their strongest weekly performance since mid-May.⁵¹ The Nifty 50 index gained 525.4 points, or just over 2%, to settle at a new closing high of 25,637.80. The 30-share BSE Sensex soared 1,650.7 points, also a gain of about 2%, to close at 84,058.90, surpassing the 84,000 mark for the first time since early October 2024.⁵

Significantly, the rally demonstrated strong market breadth, with broader markets outshining their headline peers. The Nifty Smallcap 100 index surged over 4% for the week, while the Nifty Midcap index advanced by over 2%.⁵¹ This outperformance of smaller companies is often seen as a sign of high risk appetite and strong participation from domestic retail and institutional investors. The Nifty Bank index also had a strong week, climbing over 2% and setting a new all-time high above 57,400.²

Note: Table data reflects closing prices from June 27 and weekly percentage changes based on available data. Sources:.⁵

Key Catalysts for the Rally

The market’s strong upward move was underpinned by several key factors, both international and domestic.

A crucial driver was the decisive return of Foreign Institutional Investors (FIIs). After a period of sustained selling, FIIs turned into aggressive net buyers, providing a major boost to market liquidity and sentiment. On Thursday alone, FIIs purchased a massive net amount of ₹12,594.38 crore worth of equities, one of the largest single-day inflows in recent months.²

This return of foreign capital was prompted by a significantly improved global macro environment. As one analyst noted, key catalysts like the ceasefire in the Middle East and optimism on easing trade tensions “cleared the clouds in the minds of investors”.⁵ This was compounded by two other favorable developments for India: a sharp fall in global crude oil prices, which eases pressure on India’s import bill, and a strengthening Indian Rupee. The rupee appreciated 1.3% against the U.S. dollar during the week, its best performance since January 2023, making Indian assets more attractive to foreign investors.²

This positive external backdrop allowed investors to refocus on India’s resilient domestic story. The market’s upward trajectory is supported by robust underlying fundamentals, including strong economic growth (real GDP grew 6.5% in the 2024-25 fiscal year) and a supportive monetary policy from the Reserve Bank of India, which delivered a larger-than-expected 50 basis point rate cut in early June.⁵⁵

Sectoral and Stock Spotlight

The week’s rally was not confined to a few names but was spread across multiple sectors, indicating broad-based strength.

The Nifty Metal index was the top sectoral performer, surging nearly 5% for the week, its highest weekly rise since May.⁵¹ This was driven by rising global metal prices and hopes of increased demand from a potential global economic recovery. Other sectors posting strong gains included

PSU Bank, Consumption, Finance, and FMCG.⁵¹ The only notable laggard was the IT index, which saw a minor cut of 0.4%.⁵¹

Among individual stocks, Adani Enterprises was a standout, gaining 8% for the week on positive developments across its business verticals and reduced geopolitical risk.¹⁵ Metal stocks were prominent among the top gainers, with

Hindalco, UltraTech Cement, and Tata Steel all rising between 6% and 7%.⁵¹

Jio Financial Services also surged after its subsidiary, Jio BlackRock Broking, received a stock broking and clearing member license from the market regulator, SEBI.¹⁵

From a technical perspective, the Indian market appears to have entered a new, more decisive bullish phase. For the past six weeks, the Nifty 50 index had been trading within a consolidation range, roughly between 24,500 and 25,200, indicating a period of balance and investor indecision.⁵⁵ This week, the index achieved a technically significant breakout, closing firmly above the 25,500 level.⁵⁵ Technical analysts view such a decisive move out of a prolonged consolidation band as a powerful signal of future direction. This breakout validates the market’s underlying uptrend, characterised by a classic pattern of higher highs and higher lows.⁵⁵ As a result, analysts are now upwardly revising their near-term targets for the Nifty into the 25,700 to 26,000 zone.⁵¹ This technical confirmation, supported by strong FII inflows and a positive macro environment, suggests that the market’s psychology has shifted from cautious to overtly bullish, likely attracting further momentum-driven capital and accelerating the rally in the short term.

Oceania: A Tug-of-War Between Miners and Banks

Markets in Australia and New Zealand finished the week with a sense of indecision, as a rally in globally-focused resource stocks was offset by weakness in domestically-oriented sectors like banking. This created a flat and directionless performance for the region’s key indices, reflecting the conflicting signals from the global and local economies.

Market Performance: A Flat and Indecisive Week

The Australian market, in particular, was a story of a stalemate between bullish and bearish forces. The benchmark S&P/ASX 200 index ended the week almost perfectly flat, posting a marginal gain of just 0.1% to close at 8,514.2 points.⁶⁰ The index had risen as much as 1.18% earlier in the week, touching a new all-time high, but faded significantly into the Friday close, which it finished at the session’s low. This price action points to significant investor uncertainty.¹⁶

In New Zealand, the S&P/NZX 50 index slipped by 0.3% over the five-day trading period, despite a 0.83% rebound on Friday that brought its closing level to 12,583.59.⁶² The index’s performance reflects a more sluggish domestic economic recovery, with the benchmark remaining down 5.0% over the past six months.⁶³

Note: Table data reflects closing prices from June 27 and weekly percentage changes based on available data. Sources:.⁶⁰

Australia: A Market Divided

The flat performance of the ASX 200 masked a powerful tug-of-war between two of its most important sectors.

On one side, mining stocks surged. The materials sector was a top performer for the week, driven by positive news on the global trade front and rising commodity prices.⁶⁴ The announcement of a U.S.-China trade understanding, particularly concerning rare earths, provided a significant boost. Heavyweight global miners with significant exposure to China and industrial metals saw strong gains.

BHP Group rose 3.9% for the week, and Rio Tinto jumped 4.6%.⁶⁵ This performance reflected investor optimism about the outlook for global growth and resource demand.

On the other side, banking stocks dragged heavily on the index. The heavyweight financial sector fell, with all of the “big four” banks experiencing selling pressure. Commonwealth Bank of Australia (CBA), the market’s largest stock, fell 2.8%.⁶¹ This weakness reflects growing concerns about the health of the domestic Australian economy. Data points to a sluggish recovery, with real GDP growth at just 1.3% in the March quarter and private capital spending remaining weak.⁶⁶ This environment, combined with soft consumer spending, creates a challenging outlook for lending growth and bank profitability.⁶⁷

The economic context for Australia is one of gradual recovery. The Reserve Bank of Australia (RBA) has so far held its cash rate steady at 4.10%, but with inflation moderating and growth slow, expectations are building for the central bank to begin a cycle of rate cuts later in the year, likely starting in August.⁶

New Zealand: A Slow Recovery

The performance of the NZX 50 is consistent with an economy that is on the path to recovery but is still navigating significant headwinds. While GDP data for the March quarter came in stronger than expected, key sectors like construction, retail, and hospitality remain under pressure.⁷⁰

The Reserve Bank of New Zealand (RBNZ) has been more aggressive in its easing cycle, having already cut its Official Cash Rate (OCR) down to 3.25% from a peak of 5.50%.⁷⁰ However, interest rate markets are now pricing in only one further rate cut, suggesting that the bulk of the monetary stimulus has already been delivered and the easing cycle may be nearing its end.⁷⁰ This has tempered enthusiasm in the equity market, which is looking for new catalysts for growth.

The Australian stock market’s performance this week serves as a real-time barometer for a key tension point in the global economy: the divergence between a positive global trade and commodity narrative and the reality of weakening domestic consumer demand in many developed economies. The ASX 200’s flat weekly finish was the net result of two powerful but opposing forces. The first was the globally-focused mining sector, which rallied strongly in a direct reaction to positive international news—the U.S.-China trade deal and rising industrial metal prices.¹³ The second was the domestically-focused banking sector, which fell sharply in reaction to negative local news—slowing GDP growth and soft consumer spending that clouds the outlook for loan growth.⁶¹ Crucially, market data suggests that money was not leaving the Australian market altogether, but was instead rotating

out of the banks and into other sectors.⁶¹ This puts the Australian market at the epicentre of the global investor’s dilemma: does one bet on the global “risk-on” story by buying miners, or does one worry about the domestic slowdown by selling banks? For this week, these two powerful narratives fought each other to a standstill.

Conclusion: Key Takeaways and Outlook

The week ending June 27, 2025, will be remembered for a powerful, broad-based rally in global equities, driven by a palpable sense of relief as major geopolitical and trade-related risks subsided. The dominant theme was a decisive “risk-off” to “risk-on” rotation, a shift clearly mirrored in commodity markets where safe-havens like gold and oil fell while growth-sensitive industrial metals surged. This improved backdrop allowed the market’s underlying bullish narrative—the anticipation of central bank rate cuts, particularly from the U.S. Federal Reserve—to reassert its dominance.

However, the rally is built on a foundation that appears increasingly fragile. The gains were largely a product of relief, a celebration of the absence of new negative shocks rather than a response to strong fundamental economic data. A significant disconnect has emerged between soaring stock prices and the real economy, with key data from the world’s two largest economies, the United States and China, pointing to clear weakness and contraction. The market is operating on the “bad news is good news” premise, betting that slowing growth will force central banks to provide liquidity, regardless of other factors like persistent inflation.

European and Indian markets were standout performers, benefiting from a combination of strong capital inflows and decisive domestic policy actions that provided a clearer path for investors. In contrast, Asia was a story of divergence, with Japan’s market surging on a weak yen while mainland China’s languished under the weight of poor economic data. The Australian market perfectly encapsulated the global tension, with a rally in global-facing miners being cancelled out by a decline in domestic-facing banks, resulting in a flat and indecisive week.

Looking ahead, the market’s focus will immediately turn to several key events. The approaching July 9 trade deadline, while downplayed by officials, remains a potential source of volatility. The upcoming release of the U.S. employment report for June will be critical in providing a clearer picture of the health of the labour market and will heavily influence the Federal Reserve’s thinking. Any further commentary from central bank officials will be scrutinised for clues on the future path of monetary policy. The market’s highly optimistic expectations for rate cuts will be continually tested against incoming inflation and growth data. Any disappointment on that front could seriously challenge the sustainability of this powerful, but potentially fragile, global rally.

Disclaimer

This report is for informational purposes only and is not intended to provide, and should not be relied on for, financial, investment, legal, or tax advice. The views expressed are those of the author based on publicly available information as of June 27, 2025, and are subject to change without notice. All information is believed to be from reliable sources, but no representation is made as to its accuracy or completeness. Past performance is not an indicator of future results. All investing involves risk, including the possible loss of principal. The author does not accept any liability for any loss or damage arising out of the use of all or any part of this report. Readers should consult with their own professional advisors before making any investment decisions.

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