Data source: Bloomberg

Global shares gained in Q2 despite some sharp falls at the start of the quarter when President Trump unveiled new “Liberation Day” trade tariffs. Equity markets subsequently recovered after the temporary suspension of most tariffs while trade talks took place.

 Sources: Schroeders, Bloomberg, Yahoo Finance, JP Morgan, Reuters

In the US

• US shares advanced in Q2. Gains were led by the information technology and communication sectors as investor appetite for some of the “Magnificent 7” stocks reignited.

• Stocks with exposure to artificial intelligence staged a strong recovery after some weakness earlier in the year.

• Equities were also supported by robust corporate earnings for Q1.

• Underperforming sectors in the quarter included healthcare and energy. The Trump administration is seeking to lower drug prices in the US.

In the Rest of the World

• Emerging markets slightly outperformed developed markets, helped by a weaker US dollar.
• Japanese equities saw strong gains, driven by growth stocks and easing recession fears amid improving trade talks with the US.
• EM equities rebounded after initial fears from Trump’s tariff announcements.
• A 90-day pause in new tariffs and progress in US-China trade talks made China end the quarter slightly up, while Middle East equities declined due to geopolitical tensions in the area.
  

In the US

• In Q2, the Fed kept the Fed funds rate steady at 4.25%–4.50%, stressing the need for more evidence of sustained disinflation. Powell maintained a cautious, data-dependent stance despite market (and Trump’s) pressure for rate cuts.
  

In the Rest of the World

• The BoJ held its short-term interest rate at 0.50%, maintaining its cautious policy amid persistent inflation above target and elevated global trade risks. It continued tapering government bond purchases, reducing monthly JGB purchases gradually.
• In May, China cut its 7‑day reverse repo rate by 10 bps (to 1.40%) and trimmed banks’ reserve requirement ratio by 50 bps, injecting roughly ¥1 trillion to support domestic demand amid trade and growth pressures.

• In Q2, the USD weakened sharply, falling about 7%, its largest quarterly drop in decades. As there is a big disequilibrium between US rates and EU rates, people buy euros to spend/invest as it’s cheaper to borrow than USD. As a result of these investment flows, EUR gained around 10%; same situation for GBP that rose 5–6%, and JPY which strengthened 7–8% against USD. The CAD also appreciated but more modestly – by about 3% – versus the USD.

• Digital assets were supported by major regulatory and institutional developments. Both Bitcoin and Ethereum returned more than 30% during the quarter. The US Senate passed the Genius Act, providing long-awaited clarity for stablecoin regulation. Stablecoins are used for blockchain technology and are now being implemented by some of the largest financial (Visa and Mastercard) and tech institutions globally. (Stablecoins are a type of cryptocurrency whose value is pegged to another asset to maintain a more stable price.)

• In commodities, the S&P GSCI Index declined in the quarter.

• The energy was weak. Escalating conflict risk in the Middle East caused a brief oil price surge amid worries about disruption to shipping, but oversupply of oil kept prices contained. Opec+ announced another increase in oil production for July, following two other recent increases.

• The agriculture component was also weak, although cocoa surged higher.

• Livestock, industrial metals and precious metals advanced.

• Elevated levels of risk, such as trade tariffs and geopolitical concerns, continue to see investors favour the safe haven of precious metals.

2. Growing Adoption: Retail Users, Institutions, Governments

In Q2 2025, about 28% of adults in the US own cryptocurrency, double the rate compared to 2021. An EY survey indicated 83% of institutional investors plan to increase digital asset allocations in 2025. A larger amount of major consumer companies are accepting cryptocurrencies as a form of payment, for example, Gucci, Shopify, Tag Heuer, Tesla, Starbucks, Microsoft, AT&T,… Increased adoption across central banks can also be seen. In China, the digital Yuan, e-CNY, has processed over $1 trillion in transactions since its inception in 2019 .  

4. Blockchain-AI Synergies

Blockchain technology offers a perfect framework for the data training of AI systems. For example, healthcare researchers can record patient consent and data usage on a blockchain when training medical AI, creating an audit trail, ensuring the data has not been tampered and has a clear provenance. Blockchain provides transparency and security that can make AI outputs more trustworthy. Additionally, AI algorithms help optimize blockchain through security, efficiency, and user experience. For example, AI Fraud Detection Systems, that are much more accurate and efficient than previous systems. AI enhancements make blockchain networks more robust and user-friendly, accelerating adoption. 

Steve Eisman, MD, Neuberger Bergman

Concerns about the U.S. national debt are “probably fine,”  noting that stable 10‑year Treasury yields reflect investor confidence. Eisman remains “bullish long‑term” due to AI-driven innovation, even as he reduces portfolio risk.

Jerome Powell, Fed Chair

“We paused cuts due to uncertainty from Trump’s tariffs, which elevated inflation forecasts … We need clearer data before making rate decisions.”

20 July: Japan House of Councillors Election

The Upper Chamber of Japan’s National Diet will elect 124 of the 248 members for a term of six years.

What we can expect: 

To control the Upper Chamber, 125 seats are needed; 124 are up for grabs. The ruling LDP-Komeito coalition has a narrow majority but risks losing it, which could cause political deadlock. The main election issues are government spending vs. budget cuts, and debates over immigration and national identity. Opposition parties support tax cuts and cash aid, while the ruling coalition does not. Nationalist groups want to limit foreigner benefits and influence.

29-30 July: FOMC Monetary Policy Decision and Chair Press Conference

The FOMC will announce their monetary policy decision and Fed Chair Jerome Powell will give his fifth press conference of this year.

What we can expect: 

Given that inflation remains above the 2% target, uncertainty of oil prices and tariffs are high, and the conflict in the Middle East is rising again, the Fed is highly unlikely to cut the current interest rate. Powell has stated that the Fed needs “clearer data” before making a decision. The consensus on Wall Street bet on one rate cut by December 2025.

8 September: Norwegian Parliamentary Elections

The Parliamentary elections will see 169 members elected to the Sorting for the 2025-2029 parliamentary term.

What we can expect: 

All 169 seats are up for election, with 85 needed for a majority. Labour (currently leading with 28%) is ahead in the polls, followed by the Progress Party (21%) and Conservatives (15%). Key issues include the cost of living, energy, climate, and immigration. The outcome will shape welfare spending, EU alignment, and business policy.

16-17 September: FOMC Meeting with Summary of Economic Projections 

The FOMC will publish the Summary of Economic Projections and meet to explain it, with a decision on the Federal Funds Rate likely on September 17.

What we can expect: 

By September, the Fed will have two more CPI & PCE prints, and two more jobs reports. If inflation shows clear improvement and the labour market softens further, a 25 basis point cut becomes plausible. Markets currently assign a 40-50% chance of a rate cute in September. Although some risks to watch are the higher Oil and Commodity prices as a result of conflict in the Middle East and US tariffs.