The month of June sustained the upward momentum in global equity markets, as resilient economic data and some central banks continued monetary easing fuelled investor confidence. The MSCI All Country World Equity index rose by 4.4% (in USD) in June, with most major regional markets contributing to the continued recovery.  International developed equities once again outperformed the U.S., thanks to currency tailwinds and calm central bank signals. Over the second quarter, the global index gained 11% (its largest quarterly gain for the last five years) through a roller-coaster path, marked by a decline of over 13% intra-days following Trump’s “liberation day”,  followed by a 24% increase in the final 10 weeks of the quarter. The United States continued to report strong corporate earnings and solid economic data allowed many indices there to reach record highs. The AI trade continued its momentum from May as technology stocks led the market higher. The US dollar continued to weaken in June and has fallen over 10% against a basket of currencies in 2025 so far – its worst start to a year since 1973. European markets struggled in June with most major markets posting minor losses in local terms. Optimism that fiscal stimulus and reforms would stimulate growth was dampened by some disappointing corporate earnings. ECB expectedly lowered interest rates in June, but still consumer and business sentiment declined. Asian equity markets saw varied performance: Japan and China advanced somewhat in the month despite US tariff policy uncertainty, while Taiwan and South Korea remained standout performers (up more than 9% in June), continuing to benefit from rising global demand for semiconductors and AI-related technologies. During the month tensions between Israel and Iran escalated abruptly, culminating in mid-June airstrikes that briefly rattled global markets. Brent crude oil prices surged over 7% intraday, on the threat that Iran might close the strait of Hormuz: a narrow waterway, that is the world's most strategically vital chokepoints for oil transportation, as approximately 30% of global oil and gas production passes through this strait. Oil peaked intraday over $80 per barrel, before retreating to $67–68 as Iran’s toothless response and a ceasefire eased supply concerns. Despite the geopolitical flare-up, investor sentiment in Israel strengthened with the Tel Aviv 125 equity index rising almost 11% over the month (in own currency), reflecting confidence in regional stability. Purchasing Managers’ Index (PMI) figures edged higher in June, rising from 49.4 to 49.5, signalling a slow but steady improvement in global manufacturing sentiment. Volatility remained subdued – the VIX index fell in June – underscoring the calm prevailing in equity markets. Information technology and communication services stocks led the market while consumer staples and real estate stocks trailed. A recapitulation of the first half of 2025 shows that U.S. large-cap stocks are about 6% higher despite all the “Liberation day” volatility, but they trail the 20% returns posted by international developed-market equity (in USD) driven by announcements of stimulative policies in Europe and U.S. dollar weakening. The impact of a weakening dollar was further apparent in fixed income markets. The Bloomberg Global Aggregate Bond index rose by 0.88% in June due to falling yields in major bond markets (bond yields move inversely to bond prices). Milder inflation data and signs of slowing economic growth led investors to expect rate cuts from central banks – the U.S. Federal Reserve remained on hold, but the European Central Bank (ECB) did deliver a rate cut in June.. The expectations shift supported both government and corporate bond prices globally. The weaker U.S. dollar and steady demand for high-quality bonds contributed to the positive performance of European government bonds, and they outperformed their US counterparts over the quarter. Similarly, yield curves across all major government bond markets steepened (i.e. yields moved comparatively higher in longer dated bonds). In the USA this was caused also by concerns about US long-term debt sustainability, as the “Big Beautiful Bill”, approved by the House of Representatives in June, was believed to worsen US debt dynamics. Moody’s credit rating agency emphasized the increased burden of financing the US government’s budget deficit and cut the sovereign rating by one notch. It was the last of the big three rating agencies to strip the USA of its stellar credit rating. 
        The U.S. equity markets continued their impressive turnaround in June, although the pace of gains moderated somewhat, following May’s strong rally. The broad S&P500 equity index rose by almost 5%, while the tech-heavy Nasdaq 100 added over 6%, both hitting new all-time highs in June. Tariffs remained a focal point for investors during the month, although much of the initial anxiety dissipated as ongoing negotiations revealed potentially far more favorable tariff levels than initially feared. A combination of renewed investor confidence, and a strong earnings season helped boost mega-cap tech stocks. After underperforming in the first quarter of 2025, the ‘Magnificent 7’ delivered solid price returns over the second, outperforming the remainder of the S&P500 by 14%. US shares were also supported by corporate earnings for Q1, which were generally robust and this broadened the rally. Growth and cyclical sectors, such as Technology and Energy, gained the most for the month; defensive sectors, like Utilities and Consumer Staples, underperformed. While Technology was lifted by the ongoing enthusiasm around artificial intelligence and strong semiconductor demand, Energy was boosted by the short-lived rally in oil prices caused by the abrupt Iran-Israel war. Although the conflict sparked significant geopolitical volatility, the markets’ reaction was muted. After a US intervention on 22 June, and following an OPEC announcement for increased production, oil prices settled back down below $70 a barrel for Brent crude. The macroeconomic backdrop in the United States remained broadly supportive, with some cracks: unemployment held steady (at 4,2%) but wage growth slowed slightly; Consumer Price Index (CPI) showed that year-over-year inflation came below analysts’ expectations (of 2,5%), but rose marginally from previous month (from 2,3% to 2,4%). So, the Federal Reserve left interest rates unchanged at its June meeting, but mentioned possible rate cuts in September. Hard data has remained resilient thus far, but the full impact of tariffs might become more visible in the second half of the year. In fixed income markets, the focus began to turn from monetary policy, as the Fed is unsure about a near rate cut, and towards fiscal policy and what this would mean for debt sustainability. Markets ruminated over the implications of Trump’s “One Big Beautiful Bill Act” – it was judged to worsen the US debt situation, as it could add between $3 and $5 trillion to US Federal debt over the next 10 years (before accounting for any tariff offsets). The bill extends previous tax cuts, increases defence spending, and cuts spending on programmes such as Medicaid (healthcare for the poor). With the government interest payments in excess of USD 1 trillion annually, concerns were raised about the sustainability of future Federal finances. The important US 30-year bond yields rose by 20bps over the quarter as a result, steepening further the yield curve.
         June proved to be a challenging month for European equity markets due to renewed trade tensions with the United States. President Trump’s tariff escalation, threatening duties of up to 50% on key EU exports such as automobiles, steel, and pharmaceuticals, darkened the perspectives over the region’s economic outlook. Although the EU ultimately negotiated a delay and accepted a 10% baseline tariff as a foundation for further talks, the uncertainty triggered volatility in markets, particularly in export-oriented sectors. The STOXX Europe600 index ended the month down approximately 1,3%, reflecting broad-based caution among investors. Germany’s DAX index lost nearly 0.4% as concerns over industrial exposure to U.S. tariffs weighed in. Many national stock exchanges also registered losses for the month, albeit small ones.  Beyond trade, geopolitical factors also added to the market unease. Rising tensions between Israel and Iran pushed oil prices briefly higher, supporting the Energy shares – but also stoking inflation concerns across Europe. The worst performing industries in June were the Automotive and Retail, both down around 2%; Consumer discretionary and healthcare underperformed. For the quarter though, the Industrial sector led the advance in stocks, driven mainly by defense stocks.  The agreement at the NATO summit that countries will lift defense spending to up to 5% of GDP made the stocks of European aerospace and defense companies one of the best performing global investment themes recently. Eurozone PMIs remained weak, with manufacturing still in contraction territory. Inflation continued to ease – CPI data for May showed that prices are only 1,9% higher than a year earlier, slowing from 2,2% the previous month. The ECB kept the rates on hold during the month, emphasizing data dependency amid mixed macroeconomic signals. With ECB’s Deposit rate now at 2%, President Lagarde indicated that the ECB might be approaching the end of its cutting cycle. The UK’s FTSE100 equity index was more resilient but still edged lower due to persistent inflationary pressures and political noise surrounding fiscal policy. Similarly to ECB, the Bank of England (BoE) also kept interest rates unchanged in June. Interestingly, on the background of global trade mess, the UK and India reached a landmark free trade agreement. Across Europe, fixed income markets remained sensitive to both domestic political developments and the global interest rate outlook. German Bund yields rose slightly to 2.6% at large, reflecting stable economic data and a reduced risk premium in core European markets. Italian yields remained elevated, reflecting worries over debt sustainability and inactive reform momentum, although spreads to Bunds narrowed somewhat as investors welcomed the ECB’s supportive move. 
      The Bulgarian stock market recorded a more moderate lift compared to the sharp rise in May. The biggest news of the month was that on 4 June the European Commission and the ECB confirmed that Bulgaria meets all convergence criteria and can adopt the euro as of 1 January 2026. The flagship SOFIX equity index continued its ascent by adding another 2.6% for the month, reaching a new all-time high (already +15% YTD) and confirming the positive trend. The broad BGBX40 index also rose by just over 1%, while the small-cap beamX index exploded with an 11% gain. The energy holding Petrol AD was the best performing company for the month, up 10.3%, while the worst performer was the real estate company Bravo Property Fund AD, whose price fell nearly 10%. On June 12, the Bulgarian Stock Exchange and the Central Depository held the 11th edition of the initiative "Stocks Day", in which 26 investment intermediaries and banks participated. The event realized a record turnover of BGN 7 mln and 999 transactions – almost four times the average daily level for the last year. There was also one IPO during the month – the hydrogen electrolysis company Green Innovation AD (Hydrogenera) successfully raised BGN 8 mln on the main floor of BSE.    
Source: Bloomberg, BSE