Commentary Corner - Week of June 16-20, 2025

This week has seen relatively muted activity despite growing geopolitical tensions in the Middle East. The prevailing sentiment across asset classes is the “wait-and-see” approach, with most investors watching on the sidelines for better clarity on the situation before deciding whether to deploy or withdraw capital. Only the US dollar saw significant changes on the week, as the “flight-to-safety” and the US dollar being a haven asset precipitated a rally in the US dollar against most other major market currencies.

It will be interesting to see next week how the situation in the Middle East plays out, as the actions of the parties involved will bring long-term consequences to all stakeholders globally. Specifically, the issue of US involvement in the ongoing crisis is topical, not only within Congress, but has also caused a rift within the governing Republican party as well.

On a side note, the failure of the G7 summit to come to a definite conclusion on trade means that tariff wars are likely to continue. President Trump’s proposed 50% tariffs on steel and aluminum, 25% tariffs on autos, and 10% blanket tariff on all other goods risk slowing global trade to a standstill. While this issue has been overshadowed by the onset of the war in the Middle East, it is an issue that will continue to impact the economies of DM countries until a definitive solution is resolved. On the bright side, the US and EU are coming to a consensus on non-trade-related issues, but the main question of trade remains unanswered.