Newsletter | July 2025 | Tariffs, Tech and Turbulence: H1’s Global Reset

Dollar Down, Markets Up  

Earlier this year, Donald Trump returned to Washington to lead the world’s biggest economy. The events leading up to his Presidency had already shown signs that the start of his tenure would be stormy. For decades, the US dollar upheld its status as the world’s global reserve currency, and during periods of market uncertainty, investors tended to plough into the dollar or buy the country’s debt using their Treasury bonds. But 2025 has been different.

President Trump announced long-term tariffs for US allies, sending markets into turmoil within his first 100 days as president. Since the beginning of the year, the US Dollar Index (DXY), which measures the dollar against a basket of foreign currencies, has dropped 10.7% its biggest H1 drop since the 1970s.

2025 has also been a strong year for gold as investors sought safe-haven assets, sending the bullion price up 25.6% in the first half of the year. The euro has risen, and the eurozone has also attracted substantial inflows over the first half of the year as investors sought alternatives to US assets. The eurozone equity market had a strong start to the year, alongside emerging markets.

Policies and Central Banks  

Despite all the public criticism from President Trump, the US Federal Reserve Bank (US Fed)’s chair, Jerome Powell, and his committee, kept US rates unchanged at 4.5%, having last cut rates in December 2024. The US inflation rate had risen for the first time in over four months, up 2.4% in May from 2.3% in April. Before applying any rate changes, the US Fed is watching this turnaround in inflation and the impact of President Trump’s policies, including the now-approved One Big Beautiful Bill Act (OBBBA).

Powell has been called a “fool” by Trump, as the president battled to understand why the US Fed remained steady on rates while the European Central Bank had cut rates five times this year, and the Bank of England twice, while China dropped its rates once this year. The South African Reserve Bank also cut its rates by 25 basis points in May in response to a more favourable inflation outlook.

Fear and War  

The CBOE Volatility Index (VIX), a ‘fear gage’ and a popular measure of the stock market's expected volatility, based on S&P 500 options, spiked above the 45 level after President Trump announced his ‘Liberation Day’ tariffs.

The markets were also dealt another blow when the conflict between Israel and Iran escalated. After 12 days of missile strikes between the two countries, the conflict culminated in the US dropping bunker-busting missiles in an attempt to destroy Iran’s nuclear sites. To the market’s surprise, the oil (Brent) price rose 10% during this period, but ended the quarter 9% lower.

Onshore Events  

Locally, June was a good month for the markets. Resource stocks continued their strong performance in 2025, returning 4.8%, while Industrials rose by 1.7%, and Financials gained 0.8%. The Property sector was down 0.9% for the month. Bonds delivered another solid return of 2.3%, with the South African 10-Year Bond Yield moving from 10.1% to 9.9% over the month. The FTSE/JSE All Share Index ended June up 2.4%, while the rand appreciated by 1.6% against the US dollar, closing at R17.77.

Disclosure

_{Satrix Investments (Pty) Ltd is an approved FSP in term of the Financial Advisory and Intermediary Services Act (FAIS). The information does not constitute advice as contemplated in FAIS. Use or rely on this information at your own risk. Consult your Financial Adviser before making an investment decision.}

_{While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSP’s, its shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaims all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information.}