Insights Insights Market Recap: June 2025

Insights

Market Recap: June 2025


Month in Review 

  • Easing geopolitical and trade pressures helped to lift equities higher in June, as corporate fundamentals continued to show signs of improvement.  
  • The US Dollar (DXY Index) fell -10.8% for the year ending June 30th, marking the sharpest first half decline for the currency since 1973. This provided a boost to US investors holding international assets, as detailed below.  
  • The S&P 500 completed its recovery from its roughly -19% decline, making new all-time highs and standing at +6.20% YTD (S&P 500 TR Index). In June, US small cap stocks (Russell 2000 TR Index) and US large cap growth (Russell 1000 Growth TR Index) stocks rose +5.44% and +6.38% respectively.  
  • Long-term interest rates declined from highs during the month, which helped to push major bond markets higher. The Bloomberg Barclays Aggregate Bond TR Index rose +1.54% during the month of June.  

Income Opportunity in International Equities  

International equity markets are enjoying a strong start to 2025, with the broad-based MSCI All Country World Ex-USA Index (“MSCI ACWI Ex-USA”) returning +17.90% in 2025 through June 30th. The depreciation of the US dollar has provided a significant boost to US investors holding US dollar denominated international exposure, adding over 9% to YTD 2025 results versus local currency international equities (MSCI ACWI Ex-USA Local Currency).  

In addition to the benefits of currency diversification, there are attractive income opportunities for growth and income investors. The MSCI ACWI Ex-USA has a trailing dividend yield of 2.86%, compared the S&P 500’s trailing dividend yield of 1.28%. The S&P 500’s dividend yield is below its long-term average, reflecting underlying trends within the index. Within the S&P 500, only 14.7% of the Index has a yield greater than 3%, compared to 27.7% for the Russell 1000 Value and 45.8% for the MSCI ACWI Ex-USA Index. This largely reflects the increased concentration in more growth-focused sectors such as Technology and Communication Services within the S&P 500.  

The currency diversification and higher dividend yield offered by international equities complements more growth-focused US equity exposure, a key tenant of maintaining diversified portfolios for long-term investors.  

What’s on Deck for July?  

  • As of time of writing, there is an early July deadline for re-negotiating outstanding trade deals. Progress on trade will be followed closely by investors.  
  • The Federal Reserve Open Market Committee (FOMC) meets on July 29th and July 30th to decide any changes to policy and short-term interest rates. As of 6/30, there is a 21% chance of a 0.25% rate cut at the July meeting. The so-called “dot plots” released on June 18th indicate the FOMC is expecting to cut rates by 0.25% twice in 2025.   
William Winkeler
About the Author

Bill has more than 12 years of experience in the investment industry, most recently as Managing Director of Investments at a private wealth management firm. In his role at Confluence, Bill chairs the…

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