Analysis

US Stocks Surge as Tariff Truce and Fed Rate Cut Hopes Fuel Rally | June 2025 Market Update

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US stock market chart hitting record highs in June 2025

📈 US Stocks Surge as Fed Cut Hopes and Trade Truce Drive Gains

Published: June 30, 2025
Category: Markets & Economy

US equities rallied on Monday, extending last week’s gains as easing trade tensions and growing expectations of interest rate cuts by the Federal Reserve pushed major indexes to record highs.

🔼 Major Indexes Reach New Highs

  • S&P 500 and Nasdaq 100: Up 0.5% each
  • Dow Jones Industrial Average: Gained over 200 points

📰 Market Drivers

1. 🇺🇸 US-China Trade Agreement

The US and China announced a formal agreement to prevent new tariffs, with President Trump showing flexibility on the July 9 deadline for reintroducing reciprocal tariffs. This marks a major de-escalation from past tensions, when tariffs reached up to 145%.

2. 🏦 Fed Rate Cut Expectations Rise

Investor confidence is rising as soft inflation data and global uncertainties increase the likelihood of multiple Fed rate cuts in 2025.

3. 💻 Tech Sector Strengthens

  • Canada scrapped its digital services tax, boosting US tech stocks and reopening trade talks.
  • Meta and Alphabet shares rose 1%.
  • Juniper Networks soared 9% after the DoJ approved its HP acquisition, settling a legal dispute.

💶 Eurozone: Euro Hits $1.17 as German Inflation Falls

The euro rose to its highest level since September 2021, trading just above $1.17, bolstered by:

  • Weaker US dollar from dovish Fed sentiment
  • Fiscal concerns in the US
  • Cooling inflation in Germany

🇩🇪 Germany Inflation Back to Target

According to the Federal Statistical Office:

  • CPI fell to 2.0% in June, down from 2.1%, beating forecasts
  • Core inflation eased to 2.7%, a 3-month low
  • Food inflation slowed to 2.0%, energy prices dropped -3.5%
  • Monthly CPI was flat, following a 0.1% rise in May

🏦 ECB Policy Outlook

While inflation edged up slightly in France, Italy, and Spain, the ECB maintains a cautious approach.
Vice President Luis de Guindos reaffirmed that the current policy is appropriate, but warned of the need for flexibility amid economic uncertainty.

Markets continue to price the ECB’s terminal rate around 1.75%–1.80%.

📊 Key Takeaways

  • ✅ US markets are responding positively to reduced geopolitical risk and a potential easing cycle from the Fed.
  • ✅ Eurozone inflation data provides mixed signals but supports a stable ECB outlook.
  • ✅ Tech stocks may continue to benefit from regulatory relief and favorable trade shifts.

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    Stock Market at All Time Highs

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    When is the right time to start selling the Stock Market at all time highs?

    S&P 500 Past 10 Years

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