June market update - Global markets climb on tariff truce

A temporary easing in US–China trade tensions and better-than-expected economic data lifted markets

Markets rise on trade relief.

Markets rallied in May after the US and China agreed to suspend tariffs for 90 days, easing fears of a prolonged slowdown. The truce marked a significant de-escalation in

trade tensions and helped lift global sentiment.

US stocks rebounded strongly, recovering losses from President Trump’s “Liberation Day” tariffs, supported by robust corporate earnings and better-than-expected retail and manufacturing data.

European indices also gained, helped by solid first-quarter results and easing trade concerns. The FTSE 100 hit a two-month high, with energy and financial stocks among the strongest performers. Asian shares rose after China’s central bank cut interest rates and injected liquidity to support businesses hit by weaker exports.

Mixed signals in the US.

US inflation slowed to 2.3% in April. While many tariffs were later rolled back, analysts warned the full economic impact may still be felt. The US economy shrank by 0.3%

in the first quarter. One reason was that many businesses rushed to bring in goods before tariffs were introduced, which boosted imports at the end of last year but made the start of this year look weaker by comparison. Although the trade pause has eased some concerns, there are worries that it could also mean fewer support measures from the US central bank.

For now, the Federal Reserve has kept interest rates steady at 4.25% to 4.5% and said it’s keeping a close eye on economic risks. Meanwhile, the job market remained steady. Employers added 177,000 jobs in April and the unemployment rate held at 4.2%.

UK beats expectations.

The UK economy grew 0.7% in the first quarter – the fastest pace in a year – helped by resilient consumer spending and a rise in business investment. New trade deals with the

EU, US and India focused on tariff cuts, improved market access and closer international cooperation.

Inflation rose to 3.5% in April, mainly due to higher energy and transport costs. In response, the Bank of England cut interest rates to 4.25% to help support the economy as living costs continue to rise. Although unemployment edged up to 4.5% and job vacancies fell, consumer confidence improved, turning positive for the first time in

five months. This shift suggests households are starting to feel more optimistic about the economic outlook.

Asia rebounds on tariff deal.

Asian markets rose after the US

slashed tariffs on Chinese goods from 145% to 30%, with China cutting its own from 125% to 10%. The tariff truce followed months of declining factory output and reports of layoffs in export-reliant sectors. In response, China announced further stimulus measures, including interest rate cuts and a liquidity boost to ease credit conditions.

Europe lifted by delay.

European stocks gained after the US delayed new tariffs on EU imports until July. The eurozone economy grew 0.4% in the first three months of the year, which is double the

previous quarter, as firms rushed shipments ahead of expected tariffs. Eurozone inflation held at 2.2% in April, slightly above the European Central Bank’s target. The ECB cut rates for the third time this year and signalled more easing may follow in June as trade uncertainty clouds the outlook.

Market-moving events

Tariffs stay in focus. Markets welcomed a 90-day pause in US–China trade tariffs, but tensions remain. Tariffs are still higher than before and President Trump has accused China of reneging on the deal. The US also doubled duties on steel and aluminium, while a court ruled earlier tariffs illegal, though they remain in place pending appeal.

Markets buoyed by tax shift. With trade talks on hold, the US administration is pushing to

extend Trump-era tax cuts before the summer recess. While the bill holds few surprises, it has supported the recent bounce in risk sentiment. Combined with worries about the widening fiscal deficit, it helped lift long-dated government bond yields towards their recent highs.

Data resilient but unclear. US economic data has so far held firm despite April’s dip in

sentiment, though investors remain cautious. Strong figures may reflect pre-shock momentum, while weak numbers could be shrugged off in the hope of a rebound. For now, the outlook remains clouded by political noise.

Investment highlights

Portfolio rebalance and new positioning. We completed a full rebalance of portfolios in

late April and transitioned to our latest 2025 Strategic Asset Allocation. This process ensures portfolios remain aligned with our long-term views and current economic expectations .

Tilt to smaller US companies. We recently increased our allocation to the Omnis US Smaller Companies Fund while reducing exposure to the Omnis US Equity Leaders Fund. US smaller companies trade on more attractive valuations and may benefit more from any improvement in domestic economic conditions, especially with the market concentrated in mega-caps .

Adding to Chinese equity exposure. We also recently added to the Omnis Global Emerging Market Equity Leaders Fund, focusing on opportunities in Chinese equities. Policymakers in China are beginning to support the economy more forcefully, and many companies listed on Chinese markets have limited exposure to the US. This situation creates scope for recovery, particularly as domestic stimulus measures begin to take effect.

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Issued by Omnis Investments Limited. This update reflects Omnis and our investment management firms’ views at the time of writing and is subject to change. The document is for informational purposes only and is not investment advice. We recommend you discuss any investment decisions with your financial adviser. Omnis is unable to provide investment advice. Every effort is made to ensure the accuracy of the information but no assurance or warranties are given. Past performance should not be considered as a guide to future performance.

The Omnis Managed Investments ICVC and the Omnis Portfolio Investments ICVC are authorised Investment Companies with Variable Capital. The authorised corporate director of the Omnis Managed Investments ICVC and the Omnis Portfolio Investments ICVC is Omnis Investments Limited (Registered Address: Auckland House, Lydiard Fields, Swindon SN5 8UB) which is authorised and regulated by the Financial Conduct Authority.

Approved by Omnis Investments on 2 June 2025