Rally or Retreat? Markets Surge Amid Ceasefires, Soft Data & Dollar Decline

🌍 Big Picture

Global markets navigated a dynamic and eventful week, marked by optimism from a ceasefire in the Middle East and renewed international trade negotiations. Early in the week, equities rallied sharply, driven by easing geopolitical tensions and hopes for economic stabilisation. In particular, U.S. and Asian markets reached record highs, significantly boosted by dovish central bank stances from major economies, particularly the U.S. Federal Reserve and the European Central Bank.

The Federal Reserve reiterated its cautious approach, choosing to maintain interest rates steady despite softening inflation trends, which came in at 3.8% year-over-year. The Fed's emphasis on a patient stance reinforced expectations that rate hikes have peaked, underpinning investor confidence. Concurrently, the ECB signalled its readiness to adopt further accommodative measures amid persistently weak economic indicators in the Eurozone, particularly in the manufacturing and service sectors.

However, this early optimism faced headwinds towards the end of the week as trade negotiations between the U.S. and Canada broke down abruptly due to disagreements over a proposed digital services tax. This unexpected setback renewed trade tensions, leading to cautious sentiment across markets and tempering the earlier gains in equity markets.

Geopolitical stability in the Middle East, following the ceasefire agreement, significantly reduced fears around oil supply disruptions. As a result, oil prices experienced pronounced volatility, sharply retreating nearly 12% after initially spiking. Despite this volatility, broader sentiment remained cautiously positive, supported by a continued decline in the U.S. dollar, reaching its weakest point in over five decades, largely due to the improving global economic outlook and investor risk appetite.

Investors remained divided, with institutional investors expressing caution about valuations, while retail investors showed robust enthusiasm, actively buying dips throughout the week. Safe-haven assets remained attractive amid ongoing uncertainties; gold hovered near historical highs, and bond markets rallied strongly, reflecting investor preferences for stability in uncertain times.

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📊 Assets at a Glance

📈 Equities

U.S.: S&P 500 and Nasdaq closed at record highs, rising approximately 3% and 4% respectively. Tech giants, including Nvidia, Apple, and Microsoft, led the rally despite mid-week volatility.

Europe: European indices underperformed amid tepid economic growth signals and uncertainties around trade. The STOXX 600 edged slightly lower, reflecting mixed investor sentiment.

Asia & Emerging Markets: Asian markets saw robust gains; Japan's Nikkei surpassed the 40,000 mark, buoyed by robust corporate earnings and sustained monetary support. Emerging markets benefited significantly from a weakening dollar, marking notable gains.

📉 Fixed Income

Global bond markets rallied strongly, driven by falling yields and increased investor demand for safe assets. The U.S. 10-year Treasury yield fell to approximately 4.19%, reflecting dovish policy expectations and economic caution.

🛢️Commodities

Oil: Experienced sharp volatility, initially rising due to geopolitical tensions before declining nearly 12% as supply fears subsided.

Gold: Maintained strong performance, holding above $2,300 per ounce and nearing historical highs, driven by low yields and a weaker dollar.

Platinum & Silver: Platinum showed modest gains driven by industrial demand, while silver prices edged higher, benefiting from investment demand and reduced interest rates.

Agricultural Commodities: Showed mixed performance; wheat and corn prices declined slightly due to favourable harvest reports, whereas soybean prices were stable, reflecting balanced global demand and supply dynamics.

💱 FX

USD: Continued its slide, dropping about 1.5%, marking its weakest performance in over 50 years for a first-half period.

EUR & GBP: Both strengthened notably, benefiting from favourable interest rate differentials and improving sentiment.

JPY: Slightly weakened versus USD as safe-haven demand moderated following easing geopolitical tensions.

Emerging Market Currencies: Benefited from sustained dollar weakness. The Brazilian real and Indian rupee posted moderate gains, while the South African rand and Turkish lira saw mild volatility. Overall sentiment was buoyed by improving capital inflows and expectations of stable or easing local monetary policy.

💻 Crypto

Bitcoin: Held firmly above $100,000, closing around $107,000, reflecting sustained institutional demand despite mid-week volatility.

🏠 Real Estate

Real estate markets globally showed signs of stabilisation, driven by expectations of rate cuts and improving affordability conditions. U.S. housing market indicators remained subdued but indicated potential bottoming, while the UK showed early signs of recovery.

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📅 Key Events Next Week

Monday, June 30 – Eurozone Inflation Rate (June, preliminary)

Forecast: ~1.9–2.0% YoY, easing further toward ECB target.

Impact: A softer print strengthens the case for ECB rate cuts, supportive of bonds and rate-sensitive equities. A higher-than-expected figure could temporarily support the euro.

Tuesday, July 1 – U.S. ISM Manufacturing PMI (June)

Forecast: 48.8 (vs. 48.5 prior)

Impact: Continued contraction reinforces the slowdown narrative and Fed dovishness. A rebound above 50 would lift risk sentiment and pressure bonds.

Wednesday, July 2 – Japan Tankan Large Manufacturers Index (Q2)

Forecast: +10 (vs. Q1 +12)

Impact: Decline signals corporate concern, potentially lifting JPY and weakening Nikkei. Upside surprise would support Japanese equities.

Thursday, July 3 – U.S. Non-Farm Payrolls (June)

Forecast: +130K jobs; 4.2% unemployment

Impact: A weak print (<100K) could spur expectations of Fed cuts, boosting bonds and growth stocks. A strong report may lift the dollar and cap equity gains.

Thursday, July 3 – Eurozone Retail Sales (May)

Forecast: +0.1% MoM; +2.3% YoY

Impact: Weaker data adds to easing pressure on ECB; a positive surprise may strengthen EUR and improve equity sentiment.

Friday, July 4 – U.S. Independence Day

Impact: U.S. markets closed. Low volume may exaggerate responses to global developments in FX and commodities.

Overarching Themes:

ECB Policy: Soft inflation and sluggish retail data could reinforce expectations of a rate cut in Q3. Markets may react positively to easing signals, boosting bonds and equities.

Fed Watch: Labour data (NFP) and ISM readings will be crucial for guiding rate expectations. A dovish interpretation may weigh on the dollar and benefit risk assets.

Manufacturing Signals: Japan’s Tankan and U.S. PMI data will shape views on industrial recovery and cross-border trade sentiment.

Safe-Haven Positioning: Continued geopolitical stability could dampen flows to gold and JPY, while surprises may reignite risk aversion.

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💡 Investment Idea

Fundamental Rationale: Platinum stands out as a dual-demand asset: a precious metal benefiting from safe-haven flows and an industrial commodity aligned with clean energy and automotive transformation. With central banks maintaining dovish postures and inflation stabilising, investor interest in diversified hard assets has grown. Platinum is particularly well-positioned due to tightening global supply and emerging demand in hydrogen fuel cells and autocatalysts.

Supply & Demand Outlook: According to recent estimates by the World Platinum Investment Council, platinum markets are expected to remain in deficit for the remainder of 2025. Mined supply from South Africa, which accounts for over 70% of global output, has been constrained due to energy disruptions and labour disputes. Simultaneously, industrial and investment demand has strengthened, with Chinese imports rising steadily, and the automotive and green hydrogen sectors showing increasing adoption.

Technical Analysis: Platinum has broken out of its previous price range of $835 to $1,135. In the monthly timeframe, the latest bullish candlestick closed at $1,338.90, confirming strong upward momentum. The price now hovers above the breakout zone with technical support at $1,335.74. If it sustains above this level, it confirms a continuation of the bullish trend, potentially targeting $1,400 and beyond in the coming months.

Strategy: Investors may consider gradual accumulation of physical platinum or ETF exposure (e.g., PPLT or IPLT), especially on pullbacks toward the $1,335 support level. A sustained close above this zone could validate a breakout continuation. Options traders may explore bullish positions with 1–3 month horizons, targeting further upside amid macro and industrial tailwinds.

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Risk Disclaimer

The information provided in this newsletter is for educational and informational purposes only and should not be considered financial advice. Financial markets involve substantial risk, and investments can fluctuate in value, leading to potential losses. Past performance is not indicative of future results. Before making any investment decisions, readers should consider their own risk tolerance and financial situation and consult with a licensed financial advisor if necessary. The strategies and opinions expressed are based on current market conditions and may change without notice.