Introduction to the Second Half of 2025
The first half of 2025 has been a wild ride for global markets, with surprises coming from all directions. As we enter the second half of the year, there’s no shortage of crucial events to keep an eye on. From U.S. jobs data to the European Central Bank’s conference and Chinese business activity numbers, investors will have their work cut out for them.
A Year of Surprises
The year 2025 started with a bang, as U.S. President Donald Trump’s return to power sent shockwaves through markets. The resulting "great rotation" has left even seasoned traders stunned. The U.S. dollar has had its worst start to a year since the 1970s, while the "Magnificent 7" stocks have stagnated. In contrast, Chinese "Big Tech" has soared nearly 20%, gold has surged 25%, and European defense stocks have boomed 60%.
Upcoming Events to Watch
Several key events will shape the markets in the coming weeks. Trump’s "Big Beautiful" fiscal bill is set to be rammed through by the Independence Day holiday, followed closely by the expiration of his temporary ceasefire in the global trade war.
Jobs and the Economy
The latest U.S. jobs data will be released on July 3, providing insight into the health of the labor market. Investors will be watching closely to see if the labor market is weakening, which could lead to rate cuts by the Fed. June numbers are expected to show employment grew by 129,000 jobs, down from May’s 139,000 increase.
The Impact of Tariffs and Inflation
Fed Chair Jerome Powell has warned that higher tariffs could raise inflation this summer. Investors will be monitoring the progress of Trump’s tax-cut and spending bill in Congress, which could impact the economy and markets.
Central Bankers Meet in Sintra
The European Central Bank’s annual forum will take place in the foothills of Portugal’s Sintra Mountains on Tuesday. Central bankers, including ECB chief Christine Lagarde and the Fed’s Powell, will gather to discuss the ongoing geopolitical turbulence and its impact on rates. Investors will be looking for clues on ECB policy and the future of Fed independence.
ECB Policy and Inflation
The ECB could announce the results of its strategy review, which may provide insight into the bank’s stance on stimulus and inflation. Euro zone inflation is expected to return to its 2% target in June, after dipping below it in May.
China’s Economic Recovery
China’s long-awaited economic recovery has barely taken off, despite being midway through the year. Official purchasing managers’ index figures on Monday are likely to paint a bleak picture, as Trump’s tariffs continue to hit manufacturing activity. The Caixin/S&P Global manufacturing PMI reading will follow the official release, providing further insight into China’s economic growth.
Uncertainties and Challenges
Chinese officials sound upbeat about the growth outlook, but huge uncertainties loom. Domestic deflationary pressures continue to deepen, and the fragile Sino-U.S. trade truce is hardly the endgame. Tensions between the world’s two largest economies remain, even if they are out of sight for now.
Mergers and Acquisitions
Despite the challenges, dealmakers have had a surprisingly good first half. China and Japan saw huge jumps in M&A, and Hong Kong awaits a possible Shein IPO. Global M&A remains off 2021 highs but is still up on the same period last year by nearly 25% at just over $2 trillion.
Trends and Expectations
The activity was driven by fewer but bigger deals, and this trend is likely to persist. A KPMG survey found that nearly all dealmakers said tariffs had impacted their plans, but nearly three-quarters expected M&A to exceed last year’s levels. Potential tax policy changes and the new U.S. administration’s approach to anti-trust could also increase appetite for M&A.
Conclusion
As we enter the second half of 2025, investors face a complex and challenging landscape. From U.S. jobs data to central bank meetings and Chinese economic growth, there’s no shortage of crucial events to watch. With uncertainties and challenges looming, it’s essential to stay informed and adapt to the changing market conditions. One thing is certain – the second half of 2025 will be just as eventful as the first.
