​This year has been unprecedented for global equity markets, shaped by a turbulent mix of geopolitical tensions, trade disruptions, and persistently high interest rates. Markets began 2025 on a strong footing, with equities rallying sharply in the first quarter amid optimism over disinflationary trends and accelerating gains in artificial intelligence. Investors poured into technology-heavy indices, driving major benchmarks to record highs by late January in the US. In Europe, equity markets also saw significant early-year outperformance, particularly in industrial and export-oriented sectors, as investors sought exposure beyond the tariff-sensitive US economy. However, sentiment shifted abruptly in early April when sweeping tariff announcements reignited fears of a global trade war. This triggered a swift and deep correction across global equities, erasing much of the year’s gains in a matter of days. Despite these shocks, markets proved resilient. The combination of easing inflation pressures and expectations of eventual monetary loosening helped restore confidence from mid-May onwards. The Fed maintained a cautious stance, with key policy rates remaining at multi-decade highs through the first half of the year that reflects continued concerns over wage growth and services-driven inflation. In this high-rate environment, equity risk premia compressed while real yields rose, creating headwinds for broad-based market participation. Nonetheless, AI-linked firms emerged as clear beneficiaries of the recovery rally, with strong earnings momentum, capital investment, and public enthusiasm fuelling a powerful resurgence in tech leadership. By mid-year, global equity markets had largely retraced their post-tariff losses, though underlying volatility remained elevated. While sector performance was more muted outside of technology, investor flows rebounded strongly, with active strategies seeing renewed interest amid greater dispersion in asset performance. At the same time, currency movements added complexity, particularly with the notable weakening of the USD in the first half, which bolstered non-dollar asset returns and contributed to divergent regional outcomes. Taken together, the 2025 equity market narrative so far has been one of sharp dislocation followed by a tentative recalibration, driven by the structural momentum of AI, tempered by tight financial conditions, and under constant pressure from an increasingly fragmented geopolitical landscape. The S&P 500 index started the year strong reaching new all-time highs beyond 6,000 before falling briefly below 5,000 following ‘Liberation Day’. By mid-May 2025, the index recovered fully and reached new all-time highs above 6,200 by mid-July 2025, as shown in Figure 1.

​In the months leading up to 13th June 2025, tensions between Iran and Israel had escalated significantly following a series of covert operations, cyberattacks, and proxy engagements across the region, particularly in Syria and Lebanon. Both nations exchanged sharp rhetoric and low-intensity military actions, raising fears of a broader regional conflict. On 13th June, this simmering confrontation erupted into open hostilities when Israel launched a major airstrike, prompting a wave of retaliatory missile attacks by Iran. The conflict quickly spread, with several days of intense cross-border fire, targeting military and infrastructure assets. Despite growing international concern, the United States initially refrained from direct involvement, instead calling for restraint. However, on 21st June 2025, the United States launched a targeted strike on Iranian nuclear facilities at Natanz and Fordow, aiming to significantly disrupt Iran’s enrichment capabilities. The operation marked a sharp escalation and drew immediate condemnation from Tehran. In response, Iran launched a missile and drone barrage at the US base in Qatar, causing minor infrastructure damage but no casualties. Days later, President Trump publicly called for a ceasefire, framing the US action as a deterrent rather than the beginning of a broader conflict. Since then, hostilities have subsided, though tensions in the region remain elevated and the risk of renewed confrontation persists.

​The cryptocurrency market in 2025 has experienced a dynamic and volatile trajectory, shaped by macroeconomic uncertainty, evolving regulation, and technological advancements. The year began with moderate gains, driven by institutional inflows into Bitcoin and Ethereum amid expectations of monetary policy easing in the second half of the year. Layer-2 networks on Ethereum gained traction, while Solana's developer ecosystem expanded significantly. However, momentum fluctuated due to intermittent risk-off sentiment tied to the broader equity downturn and policy signals from central banks. In the past two weeks, the market has sharply rebounded, fuelled by several converging catalysts. Bitcoin broke through $100,000 again, propelled by robust on-chain activity and renewed ETF inflows. Ethereum followed, with strong gas fee revenue and staking metrics supporting its performance despite scaling debates post-Pectra. Across altcoins, Layer-1 and Layer-2 tokens rallied on surging TVL and revived retail interest, while Solana registered a noticeable increase in decentralised exchange volume and stablecoin transfers. Investor sentiment improved markedly after U.S. inflation data came in below expectations, reinforcing Fed rate-cut bets. In parallel, geopolitical tensions showed signs of stabilising, reducing systemic risk premiums in crypto markets. A more detailed review and outlook on the macroeconomic and geopolitical landscape is provided further below from Macro Eagle. Since the beginning of 2025, Bitcoin gained 13%, while many altcoins are still in the red. Ethereum and Solana are down around 20% this year, but they have recovered substantially from their lows this year.

​Since President Trump announced a pause on tariffs in early April 2025, equity markets have rallied significantly. As shown in Figure 1, the S&P 500 rallied by more than 15% in the past five weeks and closed last week with a positive performance in 2025. Despite this rally, market participants remain hesitant, as uncertainties regarding the long-term effects of tariff policies linger. Goldman Sachs, while acknowledging the positive momentum, still projects a significant chance of recession, having recently reduced their recession probability from 45% to 35% following the tariff pause and recent trade developments.