Global Markets Hit Records while US Dollar Stumbles

CGTN Europe

CGTN Europe spoke to Joshua Mahony, Chief Market Analyst at Scope Markets.

Transcript

00:00Joshua Mahoney is Chief Market Analyst at Scope Markets.

00:03Joshua, welcome back. Help us out here then.

00:05U.S. stocks hitting a record high. The U.S. dollar stumbled.

00:09What's going on here? What's your reading of the markets?

00:14Well, much of this is a continuation of the trend.

00:17I mean, ultimately, the uptrend that has been very pronounced in nature over the long term

00:22hasn't necessarily been dominant throughout the entire period that Trump's been in power.

00:27But certainly the U.S. markets have come back into focus once again in June in particular.

00:33Of course, we've closed out the first half of the year in style for some, not so much for others.

00:37If you look at European markets, largely flat over the course of June.

00:41But June was all about U.S. markets, 5 percent gains pretty much across the board.

00:45And the weakness we're seeing in terms of the U.S. dollar really highlights the fact that as we push throughout this week

00:51with a big focus on this big, beautiful bill, so to speak,

00:54it's potentially positive for U.S. businesses.

00:58We're talking about tax cuts and alike, which could help the bottom line.

01:02But the underlying theme around the rise in terms of the debt in the U.S.

01:07And of course, that's come to a head today with Elon Musk and some of his comments that he's been making.

01:12Really, that's not necessarily a good news story when it comes to the U.S.

01:16And the growth and expectation for rate cuts from the Federal Reserve, again, with low inflation,

01:21that also piles pressure on the U.S. dollar.

01:23Some investors have been betting on Europe as a cunning plan because of all the market volatility.

01:30Is that a good strategy, at least so far?

01:32Well, look, we have been talking about the end of U.S. exceptionalism over the initial period of Donald Trump's second term at the White House.

01:43That appears to have faded somewhat.

01:45Like I said, we saw circa 5 percent gains across all of the main three indices in the U.S.,

01:51but then also the Russell 2000.

01:53So certainly there's been a flooding of capital back into the U.S.

01:56And at the same time, we've seen largely flat and just below zero percent returns for the likes of the DAX, likes of the FTSE 100.

02:04So certainly it feels like we've seen a reversal of that trend.

02:08We did see big stories around ramping up in terms of infrastructure and defense spending in Germany and in mainland Europe.

02:16Now we're seeing a focus towards the U.S. where we see this bill potentially being pushed.

02:20And ultimately, when you're looking for the growth stocks that aren't necessarily just reliant on one new policy measure from a government,

02:27all of those big tech names really do come into focus for the investors.

02:31And that's why we've seen that tech really leading the way over the course of June.

02:35Central Bank is, of course, concerned about inflation.

02:38What do you think the second half of 2025 is going to look like?

02:43I think it's going to be fascinating because we're likely to see the sort of changing of the guard in terms of who's doing the easing.

02:51Right. We've been seeing the likes of the SMB.

02:55We've been seeing the RBNZ.

02:57We've been seeing the ECB all sort of going ahead and driving down interest rates.

03:02The second half of the year is likely to be very different.

03:04Many of those that have already been cutting are likely to be talking about where that terminal rate is, that they end their easing process.

03:10And at the same time, hopefully, we get greater clarity and stability, notably for the Federal Reserve, but also for the Bank of England,

03:18where they haven't necessarily done much, but they're likely to start ramping up that easing.

03:22And we're already starting to see it with the likes of the euro strengthening against the pound.

03:27I think you see that sort of changing of the guard also influencing the FX markets heavily.

03:31Joshua, good to see you.

03:32Thanks so much for coming back on the programme.

03:34Joshua Mahoney, Chief Market Analyst at Scope Markets.

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