Financial Markets 17/06/2025
Until last Friday, the financial markets were facing the possibility of attacking the annual highs (the Nasdaq 100 was less than 1% down), or taking profits after the strong rise accumulated by world stock markets since the lows of April. The outlook was suddenly altered on Friday the 13th with the confirmation of Israel’s attack on Iran and the subsequent Iranian military response. At that moment, the markets reacted with strong profit-taking in risk assets and the purchase of safe-haven/defensive assets, which led to a sharp rise in the price of oil that reached +15% intraday and also left gold on the verge of new all-time highs. Armed actions have continued over the weekend and although the United States has appeared in the middle to try to put an end to the hostilities, we are likely to face a more volatile environment in the coming weeks than the one seen in the last few sessions.
On the macroeconomic front we were seeing data starting to show the impact of US tariffs, especially in Europe and China. Industrial production in the euro zone fell by -2.4% month-on-month after a very good first quarter, but from a positive point of view the figure represents a growth of +0.8% compared to the previous year. In China, both exports and imports in April corrected sharply and were clearly below analysts’ forecasts, apparently reflecting the impact of tariffs. Paradoxically, however, in the US the adverse effects have not yet been reflected in the data, with the CPI once again improving forecasts and remaining relatively close to 2%, while data from the University of Michigan showed a notable improvement in consumer confidence and at the same time a more optimistic view regarding the evolution of inflation in the coming quarters.
For this week, beyond the geopolitical tension and its implication in the markets, we will be awaiting the CPI and industrial production data in China, the final CPI data and the ZEW investor confidence index in the euro zone, and in the United States, retail sales data, industrial production, the Philadelphia FED manufacturing index and the FED committee meeting will be published, for which it is expected to keep the interest rate unchanged (it will also publish an update of its macroeconomic projections).
The equity markets closed with generalized declines, but without being particularly significant. In the United States, the S&P 500 and the Nasdaq 100 fell by 0.39% and 0.60%, respectively. The Euro Stoxx 50 fell by 2.57% and the Ibex 35 by 2.41%.
Government bond yields moved slightly, with the 10-year Treasury down 11 bps to 4.40%, the Bund down 3 bps to close at a yield of 2.53% and the Bono up 2 bps to end the week at 3.17%.
The alternative markets once again reflected the real pulse of the market. At the slightest setback, safe-haven or defensive assets and those used as hedges tend to rise, and this was the case in Friday’s session. Gold closed the week at record highs (closing price) and was on the verge of setting new highs. Oil prices soared on fears that the conflict in the Middle East could lead to a drop in the global supply of crude oil, especially if the conflict between Israel and Iran spreads to the region. Brent closed Friday at 74.51 USD/b, a rise of 12.10% in the week, significantly complicating the evolution of inflation if prices remain at these levels.
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And we sign off with the following quote from Vincent Thomas Lombardi, American soccer coach of Italian descent: «Individual commitment toward a group effort. That’s what makes a team, a company, a society and a civilization work».
Summary of the performance of the main financial assets (16/6/2025)
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This document has been prepared by Portocolom Agencia de Valores S.A. for the purpose of providing general information at the date of issue of the report and is subject to change without notice. Portocolom Agencia de Valores S.A. assumes no obligation to communicate such changes or to update the contents of this document. Neither this document nor its contents constitute an offer, invitation or solicitation to purchase or subscribe for securities or other instruments or to make or cancel investments, nor may they form the basis of any contract, commitment or decision of any kind.
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