Weekly Market Update (June 15, 2025)
- Market Hedwig
- Jun 14
- 2 min read
HIGHLIGHTS
Cross-asset volatility is likely to renew due to the escalating conflict in Middle East. However, if the conflict remains contained and does not disrupt energy flow globally, market impact should be limited.
Israel-Iran: Israel launched strikes against Iran, targeting its nuclear and military facilities. Israel described this operation as pre-emptive way to prevent Iran from creating nuclear weapon. The risk of wider conflict in the Middle East is expected to intensify.
Rare Earth: China has discovered the vulnerability of the US - rare earths. It helps to reduce trade war risk. China produces 60% and processes 90% of rare earths, which are the critical minerals used in robotics, electric cars, defence fighter aircraft and high-end electronics.
US exceptionalism: The wide gap in fiscal support between the US and the rest of the world has narrowed. It was mainly the driver of US exceptionalism in recent years. Markets start to factor in the potential of narrow earnings estimates gap between the US and the Eurozone in the coming year.
MARKETS
*Data as of market close. 5-day change ending on Friday.
VIEW FROM THE STREET
Equity
Goldman Sachs: Households’ allocation to equities is at 49%, which is the highest level on record since 2000. It is a key differentiator relative to other countries, such as Japan (13%) and Eurozone (10%).
UBS: Equities performed well this year as more positive news on trade policies and economic growth seems to be reflected in the prices. Increased short-term volatility enables investors to add equity exposure gradually.
Fixed Income
UBS: During periods of geopolitical tensions, some market participants are tempted to move into cash. However, we believe government bonds, high-grade and investment-grade bonds are offering attractive yields. From a portfolio risk management perspective, they are also appealing.
Morgan Stanley: The prices of credit, including high-yield, have rebounded but not retraced to the levels of the beginning of the year. If the current stock performance is forecasting the earning resilience accurately, we can expect credit to offer even better returns.
Economy
Barclays: Although the expectation of May’s inflation data is not high, we still believe that the cost-push pressure from tariffs would eventually hit the consumer prices. Meanwhile, new policies threats and geopolitical risks continue to come in.
Standard Chartered: Given the backdrop of conflicts in Middle East, we suggest keeping an eye on several factors in the coming days, including the energy supply, oil prices and potential impact on US inflation expectations driven by changes in oil prices.
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DISCLOSURE
This newsletter is meant for informational purposes only and is not investment advice. Always consult a licensed investment professional before making important investment decisions. Advertising and sponsorship do not influence editorial content or decisions. Market Hedwig is not responsible for the promises made or the quality or reliability of the products or services offered in any advertisement.
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