SSFS Market Commentary – Q2 2025
UK Market Commentary
High exposure to the energy and healthcare sectors caused UK equities to underperform its peers throughout a period of robust equity returns. However, despite this underperformance UK equities still rose over the quarter.
During its May meeting the Bank of England cut rates by 25 bps, but a cautious tone reduced hope of back-to-back rate cuts. Towards the end of the quarter labour back benchers rebelled against welfare cuts, forcing the government to move away from the planned cuts. This resulted with a sell off in the gilt markets, causing the 10-year bond yields to increase.
US Market Commentary
‘Liberation day’ on April 2nd caused steep sell offs across markets, due to the tariffs being larger than expected. This also caused the US 10-year bond yields to rise sharply as well. However, upon seeing this negative reaction to the announcement a 90 day pause in tariffs was announced, causing markets to rebound sharply. Despite the rise in geopolitical tensions and tariff uncertainty US equity markets hit all-time highs, with most sectors posting gains apart from the energy and healthcare sectors. It was a familiar story as the tech sector once again outperformed.
Contrary to the Equity markets performance the US dollar depreciated against a range of currencies including Sterling and the Euro. This increased pressure on the dollar is due to government policies and its increasing debt.
The Federal reserve maintained rates during the quarter and are still taking the wait and see approach to potential inflationary pressure caused by tariffs, before adjusting monetary policy.
Eurozone Market Commentary
Eurozone equities increased over Q2, supported by the 90 days pause in tariffs. Industrials and real estate sectors led the way, with defence stocks continuing to perform well. However, Healthcare, consumer discretionary and energy all underperformed during the quarter. In Dollar terms eurozone equities performed well due to the weakening of the dollar, causing them to be a beneficiary of the diversification away from the US.
Easing inflation meant the European central bank continued its rate cutting cycle over the quarter bringing the deposit rate down to 2% after two 25 bps reductions. However, it has signalled it is almost at the end of the cutting cycle, but the market still expects another cut by the year end.
Global Events:
China’s: Chinese equites declined over the quarter, due to continued weak domestic economic data weighing in on market sentiment. China’s year-on-year GDP rose by 5.2% easing slightly from 5.4% in the prior two quarters, reflecting slower momentum amid persistent property sector weakness and tepid domestic demand, despite resilient exports and policy support.
Oil Price Movements: Fears over the Israel and Iran war causing disruption to the shipping of oil caused a brief spike in oil prices, however, the over supply of oil quickly brought prices back down.
Global Equity Performance: Korean equities had a strong Q2 outperforming most other regions. This strong performance came from the subsiding political instability as they elected a new investor friendly government after their previous president declared martial law, spiralling them into a political crisis.
Strategic Solutions’ Centralised Investment Proposition (CIP)
| Risk Profile | Average performance | Highest performance | Lowest performance |
| Defensive | 1.83% | 2.62% | 0.90% |
| Cautious | 2.96% | 6.51% | 1.70% |
| Balanced | 3.45% | 7.24% | 2.16% |
| Moderately Adventurous | 3.82% | 7.89% | 2.49% |
| Adventurous | 4.39% | 7.78% | 3.26% |
| FTSE 100 (UK) |
2.57% |
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| FTSE ALL-SHARE (UK) |
3.76% |
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| S&P 500 (US) |
4.13% |
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| UK CPI |
1.39% |
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Outperformance:
Premier Miton’s outperformance came from their allocation to the property and alternative sectors which performed well over the quarter.
Liontrust’ outperformance came from an overweight to emerging markets and UK equity markets.
Underperformance:
HSBC’s underperformance came from an asset allocation standpoint as they went underweight on equities in anticipation for ‘liberation’ day.
LGT’s underperformance over the quarter was due to some of their selected fund’s underperforming. Two of the worst performers was a value fund and a fund which aimed to give them exposure to the financial sector.
Credo’s underperformance over the quarter came from an underweight to the UK market and a value tilt. Furthermore, their diversifiers allocation, which consists off commodities and trend-following, performed poorly.
Royal London’s underperformance over the quarter came from their broad diversification which has led to underperformance when compared with more concentrated peers.
Strategic Solutions’ outlook:
With the tariff pause coming to an end on the 9th of July and an important earnings season ahead we continue to expect increased volatility across markets. However, due to the tariff pause we believe we will see some trade deals announced which should ease some of the uncertainty around tariffs. Furthermore, Trumps ‘big, beautiful bill’ should also help ease some uncertainty surrounding the United States tax policy. With major indices like the FTSE 100 and S&P 500 hitting all-time highs it would be no surprise to see a pull back at some point during the quarter.
Past performance is not a reliable indicator of future returns. The value of investments and the income from them can go down as well as up, so you may not get back what you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. Changes in currency exchange rates may affect the value of an investment in overseas markets. Investments in small and emerging markets can also be more volatile than other more developed markets.