Welcome to the July edition of our Stock Market Trends and Updates. This month, we’re tracking a market shaped by a complex mix of key factors, including economic shifts, corporate earnings, and deepening geopolitical tensions.
Market volatility continues to dominate, with shifting dynamics and persistent challenges highlighting the unpredictable nature of the global market.
Whether you’re an experienced investor or new to the world of finance, our goal is to provide insightful updates on how the market is evolving. In this July 2025 edition, we unpack the major trends, movements, and emerging risks influencing global performance.
he first half of 2025 has been a rollercoaster for investors, but the ride culminated in a historic milestone: the S&P 500 and Nasdaq Composite both closed June with fresh all-time highs, effectively completing a dramatic comeback from the tariff-induced volatility of early spring.
The S&P 500 rose 0.5% to 6,173 on June 27, surpassing its previous record set in February. The Nasdaq followed suit, notching its record at 20,273. This marks a powerful 27% rebound from the market’s 15-month low in April, when stocks were reeling from heightened geopolitical tensions and the Trump administration’s sweeping “Liberation Day” tariff threats. At the time, the S&P flirted with a technical bear market, falling just shy of a 20% decline. Now, just weeks later, it’s not only recovered but surged to new heights.
What makes this comeback even more striking is that it occurred despite the presence of macroeconomic headwinds. Inflation surprised to the upside in May, with annualised consumer prices rising 2.7%—well above the Federal Reserve’s 2% target. Typically, such data would dampen expectations for interest rate cuts. Still, investor sentiment has remained buoyant, fueled by strong earnings (Nike being a standout), renewed optimism in U.S.-China trade negotiations, and the belief—aptly coined by traders as the “TACO” trade (Trump Always Chickens Out)—that the White House will continue to walk back from aggressive policy threats.
However, not everyone is convinced the momentum will last. JPMorgan’s top strategist has cautioned that the S&P may retreat to 6,000 by year-end, citing the delayed economic impact of tariffs, tighter immigration policies, and other unpredictable regulatory moves. Still, for now, the markets are celebrating resilience.
After a steep 19% dip earlier this year, the S&P 500 staged an impressive recovery to close the first half in positive territory. While fears of a global recession and worsening trade tensions have eased, the road ahead remains uncertain. Investors are weighing two distinct possibilities for what the rest of 2025 could bring: one of continued growth and one of heightened risk.
There are encouraging signs for the optimists. Despite the volatility in April, the market narrowly avoided a technical bear market and has regained positive momentum. Historically, when similar near-bear scenarios occurred, the market rallied strongly in the year that followed. This time, broader market participation, beyond just the mega-cap tech names, has fueled gains, with industrials leading the charge.
Valuations, too, aren’t as stretched as they may seem at first glance. While headline figures suggest the market is expensive, removing the weight of the largest companies reveals a more grounded average valuation. Meanwhile, inflation appears stable, and interest rate expectations are easing. The Fed is now anticipated to cut rates by 0.75% by year-end, which could serve as a tailwind for both equities and bonds, while helping boost interest rate-sensitive sectors like housing.
Still, warning signs are hard to ignore. Retail investors are pouring into riskier assets, pushing sentiment indicators like the CNN Fear & Greed Index into “greed” territory, often a precursor to sharp pullbacks. The explosive growth in AI-related investments may also be cooling, as capital expenditures slow and data centre spending begins to level off.
There are also concerns in the labour and housing markets. Job creation has slowed, and layoffs, particularly in the tech sector, are mounting.
Meanwhile, the U.S. is losing some of its lustre as the global growth leader, with international markets such as Spain, Mexico, and Germany outperforming. This shift could mark a more prolonged rebalancing of capital away from U.S. equities.
Geopolitical tensions continue to be a key driver of market volatility and investor uncertainty. From evolving U.S.–China trade dynamics and fractured alliances in Europe to rising instability in the Middle East and growing diplomatic strain between the U.S. and South Africa, political manoeuvring is leaving a clear economic footprint. As governments deploy tools such as tariffs, sanctions, and policy shifts to assert national interests, the global marketplace is reacting in real time, particularly in sectors like energy, defence, and technology.
Europe is entering a pivotal phase in its relationship with China as the EU–China summit approaches on July 24–25. Brussels faces internal divisions: some leaders are open to easing tariffs on Chinese electric vehicles in exchange for Beijing removing retaliatory levies, securing a rare-earth supply, and increasing Chinese investment in Europe. However, veteran EU diplomats warn against appearing to yield to economic pressure, insisting that defensive trade measures remain in place and calling for asymmetric countermeasures. These strategic tensions reflect Europe’s effort to balance economic engagement with China while safeguarding its autonomy and critical supply chains amid rising geopolitical stress.
European shares slipped on Thursday as investor caution grew ahead of the looming U.S. tariff deadline on July 9. The pan-European STOXX 600 declined by 0.9%, with Germany’s DAX and France’s CAC 40 also in the red. Concerns are mounting that the U.S. may impose new tariffs on EU goods, especially in the auto and metals sectors, if no agreement is reached in time. Meanwhile, China’s newly announced duties of up to 34.9% on EU brandy imports suggest a broader trade pushback. As global trade tensions intensify, markets are reacting more sharply to policy shifts and geopolitical headlines.
In the Middle East, escalating tensions between Israel and Iran have introduced fresh uncertainty. Israel’s targeted strikes on Iranian nuclear and military infrastructure, and Iran’s promise of harsh retaliation, have injected new volatility into global markets. While oil infrastructure has thus far been spared, the threat of disruption to key routes, such as the Strait of Hormuz, through which nearly a fifth of global crude oil flows, remains significant. Any escalation involving regional actors could rattle energy markets and drive inflation higher. Still, markets appear more resilient than in the past, with OPEC+ spare capacity and U.S. shale flexibility providing a buffer. Recent inflation data suggests price pressures remain contained for now. Still, the situation adds to the growing web of geopolitical risks facing investors this summer.
As markets recalibrate to a world shaped by shifting alliances and strategic rivalries, the line between geopolitics and economic performance continues to blur. Investors who remain attentive, adaptable, and globally aware will be better positioned to navigate the volatility and uncover value where others see only risk.
As July continues, the uncertainty persists, cautioning investors to stay vigilant and informed.
MarketWatch reports that as the S&P 500 and Nasdaq hit record highs, the broader rally is gaining momentum. The Dow and small-cap Russell 2000 have now joined the upswing, raising questions about whether this broader participation marks a turning point for the bulls. Meanwhile, in the crypto world, long-dormant “Sleeping Beauty” bitcoin wallets have stirred after 14 years, moving over $2 billion worth of BTC.
While the markets may experience sharp swings and uncertainties, it’s essential to remember that these dynamics are inherent to the investment landscape. Staying well-informed, maintaining a diversified portfolio, and adopting a long-term perspective can help investors weather the storm and seize opportunities that arise during these challenging times.
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