Quarterly Outlook
Equity outlook: The high cost of global fragmentation for US portfolios
Charu Chanana
Chief Investment Strategist
Investment and Options Strategist
Equities weathered shifting US-China trade headlines, fresh tariff moves, and political noise. The S&P 500 ended the week above 6,000 for the first time since February, powered by strong US jobs data. Volatility faded after early nerves, and major central banks signaled policy shifts. Crypto and commodities tracked the broader macro mood, with silver and steel standing out.
US stocks opened the week firmer on optimism around potential Trump-Xi trade talks. Steelmakers (Cleveland-Cliffs +23%, Nucor +10%) surged on tariff news (June 3), while auto stocks (Ford, GM -3.8%) dropped on weak EU sales. Nvidia and other tech names led gains as the S&P 500 hit a record high above 6,000 on Friday (June 6).
Tesla sank 14% on June 5 after Trump threatened to revoke Musk’s government contracts, but rebounded 3.7% on June 6 as tensions eased.
Europe’s DAX and CAC 40 gained ground on corporate tax relief and the ECB’s widely expected 25bps rate cut (June 6). UK’s FTSE 100 hit new highs, helped by a strong rally in Wise (+7% June 6).
Asia was mixed, with chip exporters and EV stocks outperforming in Japan and South Korea, while Hong Kong lagged on tech weakness and renewed trade jitters.
Market volatility steadily declined during the week. The VIX dropped from above 18 on Monday to close at 17.61 on June 5, reflecting a calmer outlook as traders unwound hedges. On Friday (June 6), the VIX briefly touched 18.35 but finished lower as a robust US payrolls report sent equities higher. Short-term volatility indicators also eased, signaling investor comfort heading into the weekend.
Crypto markets stabilized after early losses. Bitcoin hovered above $104,800 (June 5) before easing to $103,135 on June 6. Ether tracked a similar path, closing at $2,463 on Friday.
The BlackRock IBIT ETF logged steady inflows midweek, but saw its first outflow since April on June 6 as risk appetite cooled. ETHA saw strong month-over-month growth despite a late-week slip. Crypto volatility stayed near multi-year lows, with option markets indicating little fear of a deeper decline.
US Treasury yields swung with the macro data. Yields dropped below 4.40% (June 5) on weak payroll and ISM data, then rebounded to 4.51% (June 6) after strong May jobs.
ECB cut rates by 25bps on June 6 but signaled fewer cuts ahead, pushing Bund yields to a two-week high. Japanese JGB auctions were mixed, keeping the yen under pressure.
Commodities rallied broadly. US steel and aluminum futures hit multi-year highs (June 3), and silver surged 9% on the week to its highest since 2012. Gold and crude oil tracked economic and geopolitical developments, with crude closing above $65 as US-China talks resumed. Copper’s premium over London widened on tariffs and supply worries.
USD strengthened on Friday after strong payrolls data, with DXY peaking above 99.3. The euro rallied post-ECB but faded late week. The yen weakened further on soft JGB auction demand and a dovish BoJ. GBP and CAD were driven by trade developments and domestic labor data, while AUD drifted lower on RBA concerns.
Despite early jitters, equity and crypto markets ended the week on a strong note. Volatility receded, and central bank actions were met with calm. Attention now turns to next week’s inflation and earnings data as investors seek direction amid persistent trade and policy uncertainty.