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The Davy Digest - 30th June 2025

30th June, 2025

Global equities finished higher for the week as tensions eased in the Middle East following the US attack on Iran’s nuclear facilities at the start of the week. An Israel-Iran ceasefire was reached on Tuesday. A NATO summit took place in the Hague last week, where NATO leaders pledged to increase their annual defence spending to 5% GDP, meeting a long-standing demand by President Trump. On the US macro front, the S&P Global Manufacturing & Services PMIs both came in higher than expected. Michigan consumer sentiment data released on Friday showed that sentiment rebounded in June, increasing for the first time in six months. In Europe, inflation figures in both France & Spain moved higher for the first time in 2025. In Germany, the Federal Budget was approved on Tuesday, with record investments to stimulate growth and plans for defence spending to rise to 3.5% GDP by 2029. In the UK, S&P manufacturing & services PMIs increased to 47.7 and 51.3 in June respectively, more than last month’s readings. Finally, in Japan, Tokyo inflation eased to 3.1% in June, down from 3.4% in May.

Looking ahead to this week, ISM manufacturing & services PMIs will be released in the US. Nonfarm payrolls will also be released on Thursday. The most recent report for May showed that the US labour market was stable but cooling. Eurozone inflation is due out on Tuesday while German inflation figures will be released today. In the UK, Bank of England (BOE) Governor Bailey is due to speak on Tuesday amid growing signs that the UK jobs markets is slowing. Markets are expecting a rate cut at the BOE’s next meeting in August. In China, investors will receive manufacturing and services PMIs this week.

Chart of the moment

US equities moving higher amid the noise

Source: Bloomberg, Davy as of 24/06/2025. Story count is based on the Bloomberg story count function which generates a time series showing the number of Bloomberg-published stories containing the keywords “Sell America” over a selected time frame (daily in this case). 

 

  • US equities have staged a strong recovery over the last few months, despite the prevailing “Sell America” narrative in markets.
  • Markets recovered from the sharp tariff related selloff in April due to the following factors:
    • Positive developments on tariffs
    • Strong corporate earnings
    • US economic resilience
    • Strong Tech rally
    • Reversal of planned government spending cuts
  • Davy is underweight the US on a tactical basis but maintains conviction in US equities as part of the longer-term strategic asset allocation.

Warning: The information in this article is not a recommendation or investment research. It does not purport to be financial advice and does not take into account the investment objectives, knowledge and experience or financial situation of any particular person. There is no guarantee that by putting a financial or investment plan in place, you will meet your objectives. You should speak to your adviser, in the context of your own personal circumstances, prior to making any financial or investment decision. 

Warning: Forecasts are not a reliable indicator of future performance.

Warning: Past performance is not a reliable guide to future performance. The value of your investment may go down as well as up.