2Q 2025 Market and Economic Overview

The second quarter of 2025 was marked by continued volatility, driven by political uncertainty, mixed economic signals and shifting investor sentiment, although markets showed signs of resilience. The US administration postponed its tariff negotiation deadline to 9 July, which gave investors temporary relief. The only significant trade agreement finalised at that point was with the United Kingdom, which the report described as symbolically important but of limited economic impact. The report cited US and Japanese manufacturers shifting parts of their production abroad amid tariff uncertainty and higher input costs.

Equity markets performed well, particularly in the US, where a strong earnings season pushed major indices close to previous highs. Mega-cap technology stocks led the rebound, although some gains were offset in real terms by the weaker US dollar, which had fallen around 10% from recent highs against a basket of global currencies. The report described a broadening of interest beyond the technology leaders towards emerging markets, European equities, value stocks and small caps.

Commodities, which had started the year strongly, came under pressure in the second quarter. Energy prices were affected as inventories built up and demand expectations softened, and industrial metals paused as Chinese demand showed signs of moderation and global manufacturing surveys weakened. In fixed income, investors pulled back from US Treasuries amid fiscal uncertainty and a weaker dollar, while global bonds, US high yield and emerging market debt outperformed.

Fiscal policy was a further theme. The report discussed a major US tax and spending bill, nicknamed the Big Beautiful Bill, which the administration sought to pass by 4 July. The version described included further tax cuts for high-income earners, financed by reductions in Medicare spending. The report noted two economic concerns: the effect on spending by lower-income households and on economic growth, and the impact on US government debt. The report also discussed the outlook for the second half of the year, including rising debt levels, social spending cuts and global trade tensions.

Important information: This snapshot summarises MWC Group's market commentary for the period shown and is provided for general information only. It is not investment, tax or legal advice, a personal recommendation, or an offer or solicitation to buy or sell any investment, and it does not take account of your personal circumstances. Views and figures reflect conditions at the date of publication and may since have changed. Past performance is not a reliable indicator of future results. The value of investments and any income from them can fall as well as rise, and you may get back less than you invested. Exchange-rate movements can affect returns. Market data comes from third-party sources believed to be reliable, but its accuracy cannot be guaranteed. Please seek personal advice before making any investment decision. Issued by Manentia Wealth Consulting Group Limited (C80087), licensed by the Malta Financial Services Authority.