Market Commentary 10/07/25: Clear skies, cautious shifts

As June closes out, the global economic landscape continues to balance steady progress with cautious recalibration. Central banks are holding their ground, inflation is trending downward, and geopolitical risks remain in the background—but far from gone. For expats living in Germany, understanding the wider macro environment is key to making informed, long-term decisions. At LeX-Wealth, our goal is to offer strategic clarity and a calm perspective through every cycle. 

United States: inflation maintained, expectations steady

The Federal Reserve kept interest rates unchanged in June, maintaining its benchmark rate at 4.25%–4.5%. Headline inflation increased slightly from 2.3% to 2.4%, with core inflation following a similar trend. The labor market remains healthy but is showing early signs of cooling—particularly in wage growth and new job creation. Corporate earnings for Q2 have largely met muted expectations, while the U.S. fiscal debate continues with a focus on future tax structures ahead of the 2026 election cycle. 

With Trump’s policies now in motion, markets are responding to a renewed wave of protectionist trade measures, particularly tariffs on imports from China. While global supply chains and cross-border sectors are beginning to feel the impact, markets have remained relatively steady so far. That said, as fiscal tightening and trade tensions escalate, we may see increased volatility in the months ahead—an important consideration when reviewing your portfolio construction and global exposure. 

What this means for long-term investors: Despite short-term policy shifts and market noise, the U.S. remains a reliable anchor for diversified portfolios. This is a timely opportunity to review how U.S.-linked assets fit within your global strategy, especially if you're managing cross-border income or planning long-term from Germany.

United Kingdom: rate eases, but no pivot yet

The Bank of England has once again paused rate hikes, reducing to 4.25% while inflation eased to 3.4%. The property market remains fragmented: some regions continue to cool, while others—particularly university towns—remain buoyant. Investor sentiment is cautiously optimistic, supported by rising real wages and stable consumer spending. However, the post-Brexit trade environment continues to weigh on export-led sectors. 

What this means for long-term investors: For expats with UK pensions or property, policy stability supports long-term planning. It’s a timely opportunity to reassess your international portfolio strategy, including whether UK-linked assets still fit your attitude for investing.

Eurozone and Germany: stimulus speculation grows 

The European Central Bank has held rates steady, but markets are pricing in a potential rate cut in Q3. Inflation across the eurozone accelerated to 2%, offering little breathing room for policymakers. Germany’s industrial sector remains under pressure, with production falling for a third straight month. However, the country’s transition to clean energy is accelerating, with green bond issuance and solar infrastructure investment at record highs. 

What this means for long-term investors: While short-term growth is under pressure, Germany’s long-term transition story remains compelling. Investors may want to review how their current exposure to the eurozone fits within their broader investment strategy and personal risk tolerance.

China: growth surprising to the upside

China reported Q2 GDP decrease of 4.7%, down from 5.3 percent in the previous quarter and exceeding expectations due to strong industrial output and government-backed infrastructure investment. However, household consumption remains subdued, and the property sector continues to underperform. Youth unemployment and debt levels in local governments remain key structural risks, even as manufacturing expands modestly. 

What this means for long-term investors: China continues to be a strategic but complex part of global portfolios. If you're a more cautious investor, you may want to explore whether exposure is appropriate within your long-term plan.

Emerging markets: reform-led resilience

India and ASEAN economies continue to attract investor interest with steady growth, stable currencies, and digital infrastructure gains. Brazil and South Africa are showing tentative fiscal improvements, but political uncertainty remains a drag on capital inflows. The Middle East continues to benefit from oil-linked revenue, though regional tensions warrant close monitoring. 

What this means for long-term investors: A global strategy that includes selective emerging market exposure may enhance long-term returns. Emerging markets offer growth potential, but they also carry unique risks. Consider how these fit into your portfolio depending on your time horizon and investment style — and speak with your advisor about the right level of exposure for you.

Asset performance: stability with selective upside

Global equity markets posted modest gains in June, with tech continuing to lead in the U.S. and Europe. Bond yields fell slightly as rate cuts look more likely into the second half of the year. In Germany, the property market has stabilised, with urban rental demand rising despite muted purchase activity. Commodities showed divergence: gold edged down to $3, 284/oz while oil prices held near $66.64/barrel. 

What this means for long-term investors: Diversification remains the best tool for long-term success. With equities, bonds, and real assets all evolving, now is a smart time to review your asset mix in line with your goals and investment temperament.

Global headlines: what you might see in the news

• ECB holds rates, but markets price in cuts by September 

• U.S. jobs data signals soft landing scenario 

• China’s Q2 GDP surprises, but structural risks linger 

• Oil stabilises, gold dips on stronger dollar 

What this means for long-term investors: These headlines might move markets, but they shouldn't move your plan. Explore how we help expats stay financially protected in every season, whether it be smart savings or tailored health insurance solutions.

Plan with confidence, even when the market moves

At LeX-Wealth, we help expats build long-term financial strategies that stay steady through every market cycle. Whether you’re managing multi-country and tax-efficient investments, insurance, or retirement planning, we’re here to support your future with clarity and care. 

Explore our services or get in touch for a free consultation.

This commentary is intended for informational purposes only and does not constitute financial advice.