Global Equity Weekly

June 20, 2025 | 16:37

Conflict of Interest

Economist

Senior Economist and Vice President
Economics

Carl Campus joined BMO Economics in 2007 as a Research and Technical Assistant; he was later promoted to his cur... (Read more)

Carl Campus

Senior Economist and Vice President
Economics

Carl Campus joined BMO Economics in 2007 as a Research and Technical Assistant; he was later promoted to his cur... (Read more)

It’s been just over a week since the long-simmering Israel-Iran tensions evolved into a more direct war, providing global equity markets with yet another dose of uncertainty as they are forced to weigh the prospects of potentially more forceful U.S. participation in the conflict.

While it's unclear just how this will ultimately play out, upside risks to oil price projections have jumped to the forefront. WTI and Brent crude prices are up roughly 30% from the May lows when oversupply dominated the narrative, complicating the backdrop for inflation expectations and monetary policy around the globe. That’s further reflected in the latest upward revision to BMO Economics’ oil forecast, which now sees WTI averaging $67/barrel (from $63) in 2025. On the bright side, President Trump’s self-imposed two-week deadline to decide on the U.S.’s next steps has largely removed the imminent risk of a rapid escalation, providing a glimmer of hope for financial markets toward the end of the week.

That said, the major global equity indices have been unsurprisingly volatile. Following a decent start to the holiday-shortened week, the S&P 500 drifted lower in each of the last three sessions, finishing down a slim 0.2%. Sector-wise, health care, telecom and materials led the way lower, with some offsetting effect from gains in financials and technology. Of note, Wednesday’s FOMC policy announcement provided little drama (social media remarks aside) as the Fed remained on hold and continues to weigh its future easing options against projections of slower growth and faster inflation.

Source: Bloomberg

North of the border, the TSX couldn’t quite keep its head above water, tipping ever so slightly negative, displaying a similar sectoral mix to the S&P 500, with technology and financials leading, while materials and consumer staples were the laggards. Meantime, with the trade war still simmering, President Trump and Prime Minister Carney announced a 30-day deadline to piece together a trade deal. That could provide another opportunity to turn down the trade war temperature, though clearly some sticking points remain—autos, steel and aluminum, and the digital services tax, to name but a few.

While the vibe outside of North America couldn’t shake the Middle East risks and ongoing tariff-related concerns, there were also several other central banks in the mix and some choice economic data to chew on as well. Notably, the FTSE 100 (-0.9%) struggled throughout much of the week, finding little comfort in the stickier details of May’s U.K. inflation report and the Bank of England’s ongoing “gradual and cautious” approach to monetary policy. On the flip side, the Nikkei (+1.5%) was among the better performers in a week that saw slumping motor vehicle exports hit trade in May, while firmer core inflation metrics lumped more pressure on the Bank of Japan to tighten policy after it chose to remain on the sidelines on Tuesday.

Major Index Performance

North American Sector Performances

(% change over period)

Table 1 - S&P 500 Sector Performance

Source: BMO Economics, Bloomberg

Table 2 - TSX Sector Performance

Source: BMO Economics, Bloomberg

TSX Relative Sector Performance

(relative to the index, year-ago = 100; dashed line = 200-day m.a.)

S&P 500 Relative Sector Performance