Investment Insights June 2025
Take a breather…for now
After a whirlwind few months of policy surprises from the US administration, markets have had plenty to digest — from trade shakeups to rising geopolitical tension and fiscal changes in the US, it’s fair to say that markets have delivered a roller-coaster start to 2025.
While short-term swings feel uncomfortable, they seldom alter the long-term rewards that disciplined, diversified portfolios enjoy. As always, a clear investment objective with a balanced portfolio remains your best ally.
What’s Been Happening in the Markets?
After peaking in February, global asset prices dipped following the “Liberation day” announcement of sweeping trade policy changes by the US. Since then, markets have somewhat recovered year to date.
Equities: US stocks are down about 7.7% percent, pulling global shares 4% lower.
Bright spots: European markets, led by Germany, are up roughly 11%.
Commodities: Gold has climbed nearly 28% year-to-date while Oil has declined ca. 12.7% to $65 per barrel,
Currencies: The US dollar has slipped 10% against the Euro making EU exports more expensive.
Bond Yields: Remain steady but caution is warranted with the US 30 year yield is now near 5% (not shown).
Big picture policy shifts…
Washington has redrawn the trade map and are rolling out their new vision of global trade. The next few weeks will reveal a lot on what the new trade order will look like but in the meantime, we are mindful of the following;
- China & EU trade negotiations with each other & the US – who will blink first?
- Tariff reset - a pivot to protectionism at the nationalist level – is a 25% tariff really fair?
- Defence burden-sharing - tougher talk from the US on NATO and EU spending – specifically, they are requesting 5% of GDP to be spent on defence. This is not realistic.
- “One Big Beautiful Bill” – a proposed bill which will cut US state aid and lower taxes in the US and which is estimated could swell US debt by €2.7 trillion over the next decade.
Our investment view…
With the global macroeconomic picture in mind, we remain in favour of globally diversified portfolios, but we are trimming overweight US equities (which remain about 70 percent of world indices) and tilting the balance toward Europe and Japan, where valuations look more attractive. Volatility is inevitable and we accept that while the pillars of diversification and discipline remain at the core of our investment allocation.
What this means for you…
- Regular contributors: Keep investing steadily to avail of Euro cost averaging, though easing US exposure in favour of European and Japanese equities.
- Lump-sum investors: Can invest in risk assets over stages; act faster on conservative slices.
- Fixed income: Short-duration bonds offer an effective cushion against equity swings.
- Low-volatility portfolios: Money-market funds and hedge funds to help smooth volatility.
Important: This note is for information purposes only and should not be taken as advice. Markets and data are subject to change. Please seek personalised financial guidance. Lifetime Financial Planning is not responsible for any loss arising from reliance on the content above.
Sources: Federal Reserve, ECB, CBOI, Treasuries, Sharepad®, Vanguard, Bloomberg, Ruffer, Davy Select. Euro Inflation measured by Harmonised Indices of Consumer Prices (HICP). Images created by ChatGPT.
Harmonised Indices of Consumer Prices (HICP). Images created by ChatGPT.
