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17th July 2025
Cappuccino Commentary
A relaxed read on the issues of the day
June Review
As we move into what’s looking like a really hot summer and take stock of the year so far, there’s been plenty of interesting developments.
Despite concerns around President Trump’s trade policies and escalating conflicts with Iran, most major asset classes delivered positive returns over the quarter. While this is encouraging, we have seen significant market volatility along the way.
Starting in the US, Trump’s policies had a meaningful impact on markets given the scale and unpredictability of his actions in recent months. Most equity markets took a sharp downward tumble after Trump’s “Liberation Day” tariff announcements at the start of April. A week later, this led Trump to delay some tariffs and reduce others, and US equities recovered to finish the quarter up 5.7%, with a 2.8% increase in June.
So far, regional diversification has really benefitted portfolios in 2025. In the last quarter, we saw strong gains from Europe (6.5%), the UK (5.2%), Japan (4.7%), Asia (+7.8%) and Emerging Markets (5.8%).
Year to date, most regions outside of the US have generated gains, while the US has lagged, particularly in sterling terms as the US dollar has depreciated against the pound. We believe there are several factors driving this shift. First, the valuations of many international companies had been trading at more attractive levels than their US counterparts. In Europe, we’re seeing a move away from austerity to fiscal stimulus which should help accelerate economic growth. In Emerging Markets, we have higher growth rates and an expanding consumer base which is attractive relative to other developed markets. As a result, we continue to see good opportunities outside the US and want to maintain exposure to fund managers that can take advantage of these investments.
Bonds generally delivered strong returns over the period, led by Global and UK corporates delivering 4.3% and 27% respectively. UK Gilts also rose the quarter by 1.8%. Politically, June was a bit of a mixed bag here in the UK, as we saw separate trade deals with the US and Gulf States announced, a £500mn investment in quantum computing and Rachel Reeves’ welfare cuts being countered by rebels throwing her budgetary plans up the air. Conversely, Global Bonds fell -2.2% due mainly to the impact of falling US Treasuries. In the US, rising fiscal concerns led to a downgrade of the US sovereign credit rating by Moody’s and the selling of long-dated bonds pushed yields higher.
It is encouraging to see markets recover significantly since the April lows, however, there remains considerable uncertainty around Trump’s policies and the impact they will have over time. In June alone, we saw Trump very publicly fallout with Elon Musk, deploy the National Guard in Los Angeles, and go back on his campaign trail promises by turning interventionist, and bombing Iranian nuclear sites. While these challenging times of geo-political uncertainty continue, diversification remains key, but as always we remain vigilant for new investment opportunities.
This information is intended for regulated financial advisers and investment professionals only. Copia does not provide financial advice. This information is not intended as financial advice and should not be interpreted as such.