Q2 2025 Market Summary

A Lesson in Perspective

The second quarter (Q2) of 2025 has reminded us of an important truth: headlines don’t always reflect your personal investment experience.

At first glance, you might see reports that the S&P 500 is back in positive territory. Great news, right?
But for UK-based investors, there’s a catch: currency matters.

The US dollar has weakened against the pound in recent months. That means while the S&P 500 has shown gains in USD, those returns have been eroded—or even reversed—when converted into GBP.

As of the close of business on 1st July 2025, here’s how major indices have performed year to date in their “Local” currency terms:

• S&P 500 (US): +5.87 % 
• FTSE 100 (UK): +9.80% 
• Euro Stoxx (Europe): +9.97% 

The performance of these same indexes year to date in GBP terms however:

• S&P 500 (US): -3.34%
• FTSE 100 (UK): +9.80%
• Euro Stoxx (Europe): +14.20%

This mismatch between headline numbers and investor reality is a classic reminder of why investing isn’t just about what markets do, but is about how you’re positioned, what currency your assets are priced in, and, most importantly, what your long-term goals are.

What’s been driving markets?

Uncertainty remains the key theme. US tariffs, slowing economic data, shifting interest rate expectations, and political noise. While inflation has been more contained in the UK and Europe, US inflation has proven stickier, keeping markets guessing about the Federal Reserve’s next move.

Meanwhile, the tech-heavy S&P 500 has been heavily reliant on a handful of mega-cap names, which creates a narrow and potentially fragile rally.

So what does this mean for you?

• Volatility isn’t failure, it’s part of the process! Temporary drawdowns, currency swings, and political noise are all baked into a long-term investment journey.
• Currency fluctuations are a fact of life when investing globally. Sometimes they help, sometimes they hurt, but they tend to even out over time.
• Diversification matters! UK and European markets have been steadier in GBP terms this year, and portfolios that spread risk across geographies and asset classes have fared better.
• Your plan still works. It’s built for times like these, not just the calm and comfortable periods.

The bottom line?

We don’t invest in markets, we invest in time.

And over time, the noise fades. The headlines change. But a well-structured financial plan, aligned with your goals and underpinned by a globally diversified portfolio, gives you the best chance of success.

If the recent currency or market movements have raised questions about your portfolio, please don’t hesitate to get in touch. We’re always here to help you tune out the noise and stay focused on what really matters.