Markets ended the first half of 2025 on a firmer footing, shrugging off mid-month volatility to deliver a broadly positive performance. While geopolitical tensions and ongoing trade uncertainty sparked brief bouts of risk aversion, investor sentiment improved as inflation remained contained in most regions and policy support persisted. Developed market equities maintained their positive momentum into June, with the MSCI World Index gaining 4.5% for the month and 9.8% year-to-date, rebounding from early-month turbulence linked to the Israel-Iran conflict, the war in Ukraine, and broader trade frictions. Emerging markets also rallied, with the MSCI EM Index up 6.1% in June and 15.5% year-to-date, boosted by strong performance in China and renewed appetite for risk assets. As we enter the second half of the year, attention shifts to the global inflation path, policy direction, and the evolving geopolitical landscape.

LOCAL MARKETS

Exhibit 1 | Local Performance (ZAR) for June 2025

Source: Factset. Data as at 30 June 2025. Past performance is not indicative of future performance. For illustrative purposes only and not indicative of any investment.

South Africa

Economy

South Africa’s economic data for May continued to reflect subdued domestic demand and relatively contained inflationary pressure. The headline consumer price index (CPI) held steady at 2.8% year-on-year, unchanged from April, while core inflation (which strips out volatile food and energy costs) remained at 3.0%. Both measures sit at the lower end of the South African Reserve Bank’s (SARB) 3% to 6% target range. The modest inflation outcome was helped by soft domestic demand and favourable base effects. Despite inflation running below target, the SARB is expected to keep interest rates on hold in July amid lingering fiscal and political uncertainty.

Meanwhile, the rand appreciated by 1.6% against the US dollar during the month, supported by broad-based dollar weakness, as the greenback recorded its worst year-to-date start in over five decades. On the growth front, the economy narrowly avoided a contraction in the first quarter of 2025, with GDP rising just 0.1% quarter-on-quarter following a revised 0.4% gain in the fourth quarter of 2024.

Equity and Bond Markets

South African markets ended the second quarter on a strong note, with the JSE All Share Index and Capped SWIX both gaining 2.35% in June, bringing their year-to-date returns to 16.7% and 16.1%, respectively. The local rally was driven largely by mining stocks, particularly platinum counters, which surged on the back of a 28.5% rise in the platinum price, its highest level since 2014. Together with gold shares, precious metal miners have accounted for more than half of the JSE’s gains so far this year.

Industrials and financials also ended the month in positive territory, while property stocks lagged, declining 1.4%. Investment holding companies Naspers and Prosus added to market strength, climbing 7% in June as investors welcomed the strategic direction laid out at the Prosus Capital Markets Day.

Meanwhile, bonds also delivered solid performance. The All-Bond Index (ALBI) rose 2.3% for the month, supported by stable inflation and growing expectations that interest rates may remain unchanged.

Best performers:

• Northam Platinum Holdings Limited: 26.6%
• Impala Platinum Holdings Limited: 23.09%
• Reinet Investments S.C.A.: 18.25%
• Sibanye Stillwater Limited: 17.65%
• MTN Group Limited: 12.67%

Worst performers:

• Woolworths Holdings Limited: -11.67%
• Mr Price Group Limited: -8.24%
• Pepkor Holdings Ltd.: -6.71%
• Shoprite Holdings Limited: -5.16%
• Nedbank Group: -4.87%

GLOBAL MARKETS

Exhibit 2 | Global Performance (base currency) June 2025

Source: Factset. Data as at 30 June 2025. Past performance is not indicative of future performance. For illustrative purposes only and not indicative of any investment.

United States

US equity markets rallied strongly in June, brushing off mid-month volatility driven by geopolitical tensions and ongoing tariff uncertainty. The Nasdaq 100 led the gains with a 6.3% return, followed by the S&P 500 and Dow Jones returning 5.0% and 4.5%, respectively. Markets were unsettled briefly by US military action in the Middle East, but investor sentiment recovered quickly as tensions eased, and optimism returned following a temporary pause in tariff escalations and progress in US-China trade talks. Large-cap tech stocks powered the rebound, helping erase earlier losses from the first quarter.

On the policy front, the Federal Reserve left interest rates unchanged at 4.25% – 4.5% for a fourth consecutive meeting. While most Fed members still expect two rate cuts in the second half of the year, a growing number now believe rates should remain on hold amid rising inflation risks from tariffs. Inflation data was mixed – headline CPI rose to 2.4% year-on-year in May, while core PCE, the Fed’s preferred inflation measure, edged up to 2.7%.

Meanwhile, first quarter GDP was revised lower to -0.5% annualised, as trade disruptions weighed on economic activity. The US dollar remained under pressure, with the Dollar Index falling 2.5% in June and marking its worst start to a year since 1973, as investors weighed up political uncertainty, fiscal concerns, and questions around the Fed’s independence.

Europe

European equity markets lost some momentum in June, closing out the first half of the year on a softer note. The Euro Stoxx 50 and France’s CAC 40 both declined by 1.1%, while Germany’s DAX 30 posted a more modest loss of 0.4%. Investor sentiment was weighed down by renewed geopolitical tensions in the Middle East, ongoing concerns around US tariff policy, and mixed economic data across the region. While markets briefly pulled back mid-month as global tensions flared, the de-escalation of the Israel-Iran conflict helped stabilise conditions by month-end.

On the macro front, eurozone inflation slowed, with headline CPI easing to 1.9%, coming in below the European Central Bank’s 2% target for the first time in over eight months. Core inflation also moderated to 2.3%, marking its lowest level since early 2022. Despite the softer inflation prints, uncertainty around trade policy and weaker economic signals kept European equities under pressure.

United Kingdom

UK equities were broadly flat in June, with the FTSE 100 ending the month marginally higher by 0.05%. This brought the index’s year-to-date performance to a respectable 9.5%.

Inflation data showed continued signs of easing, with headline CPI coming in at 3.4% year-on-year in May – this is slightly down from April’s 3.5% and broadly in line with expectations. Core inflation (which excludes food and energy) also moderated to 3.5% from 3.8% in the previous month. The softer inflation trend offered some relief to investors, although concerns about the economic outlook and global trade tensions kept markets in check.

Asia

Asian equity markets delivered solid gains in June, supported by improving sentiment in China and strong momentum in Japan. Chinese stocks continued their upward trend, boosted by renewed trade diplomacy and ongoing policy support from Beijing. The Hang Seng Index rose 4.1% for the month, bringing its year-to-date gain to 20%, while the Shanghai Composite added 2.9%. Optimism was lifted by a 90-day tariff truce between China and the US, alongside easing export restrictions and domestic stimulus efforts aimed at stabilising the property sector and supporting growth. In Japan, the Nikkei 225 climbed 6.8% in June, with investors shrugging off tariff concerns.

Rising inflation, which printed at 3.7% in May, added to speculation that the Bank of Japan may consider further tightening later this year.

Emerging Markets (EM)

Emerging market equities had a strong month in June, with the MSCI EM Index rising 6.1%, bringing its year-to-date performance to 15.5%. Gains were broad-based, supported by improving sentiment toward China, a weaker US dollar, and easing geopolitical tensions. The rally was further fuelled by optimism around global trade developments and renewed investor interest in risk assets, helping EM stocks outperform many of their developed market peers in the first half of the year.

Commodities

Commodities posted mixed returns in June, with standout gains in platinum group metals. Platinum surged 28.5% for the month – its best monthly performance in years – driven by a spike in Chinese imports, the likelihood of another annual supply deficit, and growing investor interest. Palladium also rallied, gaining 13.6%, while rhodium edged up 0.5%. Gold posted a modest 0.4% monthly gain but remained up 25.9% year-to-date, supported by persistent geopolitical risks and demand for safe-haven assets. In the energy market, Brent crude oil rose 5.8% as tensions flared in the Middle East following a US airstrike on Iranian nuclear facilities. Prices briefly jumped above $80 per barrel before retreating to around $67 after a ceasefire was announced, highlighting the volatility driven by geopolitical developments.

Outlook

While markets delivered strong gains in the first half of 2025, the path ahead is likely to be more complex. Persistent geopolitical risks, renewed tariff tensions, and shifting global trade dynamics could weigh on sentiment and growth in the months ahead. Inflation appears to be cooling in many regions, but food and energy price volatility remains a risk, particularly for emerging and commodity-driven markets like South Africa.

Monetary policy is expected to remain cautious, with central banks in a holding pattern as they weigh inflation trends against economic resilience. A weaker US dollar and stable financial conditions offer some tailwinds for risk assets, especially in emerging markets. However, export-dependent economies will need to navigate rising protectionism and fragile global demand.

Overall, staying diversified and focusing on quality remains key as markets enter a more uncertain phase.