Market navigator: week of 30 June 2025
US technology stocks reached new peaks whilst commodity volatility eased following Israel-Iran ceasefire, with Australian rate cut expectations strengthening.
Summary
- What happened last week: Global markets navigated geopolitical volatility as an Israel-Iran ceasefire concluded twelve days of conflict, whilst the US dollar extended its sixth consecutive monthly decline amid policy uncertainty.
- Markets in focus: US equities achieved fresh highs, Australian inflation data solidified dovish central bank expectations, and Bitcoin consolidated near recent peaks.
- The week ahead: Market participants will scrutinise pivotal US labour market indicators, Chinese manufacturing sentiment data, and European inflationary dynamics for directional guidance on monetary policy trajectories.
What happened last week
- Israel-Iran ceasefire: Just as the world braced for escalation following US' strikes on Iranian nuclear sites, Iran responded with a pre-amped attack on US military base in Qatar. A ceasefire was then established, concluding the 12-day conflict. The situation remains fragile given uncertain damage to Iran's nuclear facilities and implications for future nuclear weapons development.
- Commodity price volatility: WTI crude oil gapped higher to $78.40 on Monday following US strikes but surrendered all gains during the conflict, settling around $65.00. Gold retreated to $3,270 as Middle East tensions eased. US natural gas July futures declined to $3.26, marking four-week lows due to inventory accumulation and increased production output.
- USD extends sixth consecutive monthly decline: The dollar index declined 1.5% last week, in proximity to March 2022 lows. The unusual plan to appoint a new Federal Reserve (Fed) chair way ahead of Powell's term expiration in May 2026, combined with first-quarter GDP downward revisions and benign personal consumption expenditure (PCE) data, have collectively pressured Treasury yields and the greenback.
- Tariff deadline approaches: The 90-day country-specific reciprocal tariffs expires on 8 July. Only the UK and China have preliminary agreements to avoid deadline impacts. European Union leaders continue negotiations for balanced proposals addressing member state requirements. The White House announced agreements with China on rare earth delivery.
Markets in focus
Nasdaq 100 achieved new high
Major US equity indices posted substantial gains following Middle East de-escalation, demonstrating resilience despite deteriorating economic indicators including weakened consumer sentiment, continuing jobless claims rising to 1.974 million, and first-quarter GDP growth revised downward from -0.2% to -0.5%.
The Nasdaq 100 and S&P 500 indices established fresh all-time highs, with Technology and Communication Services sectors leading performance. Micron Technology -- America's largest memory semiconductor manufacturer -- provided optimistic fourth-quarter guidance citing robust artificial intelligence equipment demand. Nvidia, Microsoft, and Broadcom were among a dozen of Nasdaq 100 constituents achieving 52-week highs.
Technical analysis of US Tech 100 reveals a decisive break above the 18 February all-time high, suggesting potential for testing the next psychological resistance level at 23,000. Should price movements from the 21 April low follow Elliott Wave Theory's Wave 3 pattern, a 200% Fibonacci extension could potentially drive the index to 24,718 before corrective Wave 4 materialises. However, valuations appear stretched with the relative strength index in overbought territory and price-to-earnings ratios two standard deviations above rolling five-year averages. Immediate support level should emerge around 21,500.
Figure 1: US Tech 100 index (daily) price chart
Subdued inflation reinforces RBA's dovish trajectory
Australia's monthly Consumer Price Index (CPI) reading reaffirmed controlled inflationary dynamics, easing from 2.4% year-on-year (YoY) in April to 2.1% in May. The indicator has remained within the Reserve Bank of Australia's (RBA) 2-3% target range for ten consecutive months. The lower-than-expected trimmed mean inflation reading falls below the RBA's forecast of 2.6% for June 2025, which, combined with growth deceleration indicators, strongly suggests rate cuts at the 8 July meeting.
Bond futures markets price a 92% probability of a 25 basis point reduction in July, compared to 85% before the CPI release. December futures rates at 3.02% imply three to four rate cuts by year-end. More accommodative monetary policy could support the Australian economy, demonstrating positive correlation with Australian dollar performance.
AUD/USD concluded the week 1.2% higher at 0.6529, after reaching a seven-month high of 0.6563 on Thursday. Sustained US dollar weakness driven by tariff uncertainty, mounting government debt, and Federal Reserve independence concerns may enable other major currencies including the AUD to continue upward trajectories. Key risks include approaching reciprocal tariff deadlines. As a typical risk proxy, the AUD could face severe pressure from unfavourable trade outcomes, particularly between the US and China.
Technical analysis shows AUD/USD has established an uptrend since crossing the 200-day simple moving average in mid-May. The upper band at 0.6584 may provide minor resistance, but breakthrough would signal advancement towards major resistance at 0.6690. Solid support is provided by the 200-day SMA at 0.6355.
Figure 2: AUD/USD (daily) price chart
Bitcoin consolidates near historic peaks
Following record highs established on 23 May, Bitcoin has maintained a mildly bearish trajectory. The recent Israel-Iran conflict exacerbated this trend, driving the cryptocurrency -- typically viewed as a risk asset -- down to $98,325 briefly. With major US indices and large-cap technology companies establishing new highs following the ceasefire, Bitcoin has stabilised around $107,000, approximately 4.3% below its peak.
Technical analysis reveals diminished trading volumes in June compared to May. Traders remain uncertain about short-term prospects, awaiting clear directional signals. A decisive break above trend resistance around $108,000 would provide bullish confirmation for advancement towards major technical and psychological resistance around $110,000. Conversely, a clear breach below support at $102,200 could drive Bitcoin towards the recent low at $98,235.
The relationship between Bitcoin and Ether, the second-largest cryptocurrency, merits consideration. Ether has exhibited higher market sensitivity (beta) throughout this year. Peak-to-trough drawdowns from January to April measured -60% versus Bitcoin's -28%. However, during recent recovery phases, Ether generated 90% returns compared to Bitcoin's 44%.
Figure 3: Bitcoin (daily) price chart
The week ahead
The upcoming week delivers critical economic insights emphasising US employment dynamics, Chinese manufacturing health, and European inflation trajectories. Employment data dominates the US calendar, including Job Openings and Labor Turnover Survey (JOLTS) findings, ADP employment figures, and the closely monitored non-farm payrolls report, providing essential labour market insights.
May's US labour market added 139,000 jobs under non-farm payrolls. While exceeding expectations, this represented deceleration from April's 147,000, though unemployment remained steady at 4.2%. Markets anticipate 129,000 June job additions with unemployment expectations unchanged at 4.2% for the fourth consecutive month. However, downside risks to non-farm payroll figures exist given weakness in continuing and initial jobless claims data.
The European Central Bank (ECB) Forum on Central Banking convenes in Sintra from 30 June to 2 July, providing platforms for policymaker, academic, and financial professional dialogue. Subsequently, European inflation data for June will assess whether regional disinflation trajectories remain intact, raising questions regarding potential eurozone policy adjustments.
Previous purchasing managers' index (PMI) data revealed pronounced deterioration in China's manufacturing sector. Both National Bureau of Statistics (NBS) and Caixin PMI readings fell below the critical 50 threshold in May, signalling sector contraction amid weakening foreign demand. While services demonstrated modest expansion, this failed to offset manufacturing downturns. Survey findings highlighted intensified business competition placing additional downward pressure on pricing.
We anticipate potential improvements in this week's figures, with manufacturing PMIs expected to recover above 50 while services PMIs should maintain modest expansion. Recovery drivers may include recent constructive US-China trade discussions in London potentially catalysing renewed foreign demand, and the 618 online shopping festival could provide domestic consumption support. Key metrics to watch include input costs and output pricing indices, offering insights into whether China's persistent deflationary pressures are beginning to ease.
Figure 4: China's PMI data
Key macro events this week
Monday 30 June 2025
- 9.30am (HK time) -- China NBS Manufacturing PMI (June): previous 49.5, consensus 49.7
- 9.30am (HK time) -- China NBS Non-manufacturing PMI (June): previous 50.3, consensus 50.3
Tuesday 1 July 2025
- 7.50am (HK time) -- Japan Tankan Large Manufacturers Index (Q2): previous 12, consensus 10
- 9.45am (HK time) -- China Caixin Manufacturing PMI (June): previous 48.3, consensus 49
- 1.00pm (HK time) -- Japan Consumer Confidence (June): previous 32.8, consensus 33.6
- 5.00pm (HK time) -- Euro Area Inflation Rate YoY Flash (June): previous 1.9%, consensus 2%
- 10.00pm (HK time) -- US ISM Manufacturing PMI (June): previous 48.5, consensus 48.8
- 10.00pm (HK time) -- US JOLTS Job Openings (May): previous 7.391M, consensus 7.45M
Wednesday 2 July 2025
- 9.30am (HK time) -- Australia Retail Sales month-on-month (MoM) (May): previous -0.1%, consensus 0.3%
- 8.15pm (HK time) -- US ADP Employment Change (June): previous 37K, consensus 80K
Thursday 3 July 2025
- 9.30am (HK time) -- Australia Balance of Trade (May): previous A$5.413B, consensus A$5.1B
- 9.45am (HK time) -- China Caixin Services PMI (June): previous 51.1
- 8.30pm (HK time) -- US Non-farm Payrolls (June): previous 139K, consensus 129K
- 8.30pm (HK time) -- US Unemployment Rate (June): previous 4.2%, consensus 4.2%
- 10.00pm (HK time) -- US ISM Services PMI (June): previous 49.9, consensus 50.3
Source: Trading Economics, Reuters (as of 28 June 2025)
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