Stock market outlook 03/2025: The customs carousel continues to turn

March 5, 2025

What has been the focus in recent weeks

The last few weeks on the financial markets have once again been dominated by the USA. The first weeks of Trump’s second term were characterized by a barrage of decisions that caused uncertainty on the markets. In particular, his trade policy with high import tariffs shook up existing orders and supposed certainties. After all, good trade relations are a key success factor for the prosperity of an economy, which is now considered to be at risk.

In recent weeks, there have also been signs of a slowdown in US economic growth with cautious consumer behavior and stubborn inflation.

All of this led to high volatility on the markets and weighed on the equity markets in the USA, in stark contrast to Europe and therefore also Switzerland. Here, some share indices reached new records. Meanwhile, the major Asian stock markets remained relatively stable. In terms of individual sectors, the defensive areas of pharmaceutical and utility stocks performed best, while technology stocks fell the most.

Our investment solutions and positioning

In February, our multi-asset solutions again in February, with the overweight in Swiss equities and gold again paying off. Real estate and European industrial stocks also made a positive contribution to the overall result. While bonds once again had a stabilizing effect, global equities came under slight pressure, mainly due to large individual stocks. We are currently maintaining our positioning with a clear overweight in Swiss equities.

With the correction in high-growth equities, our equity strategy Global Equity Trends has also come under pressure. As a result of this development, there have been some shifts in the sector trends in recent weeks. For example, value stocks, stocks with low volatility and companies from the consumer staples sector have now qualified for inclusion in the portfolio. They predominantly replace small and mid-capitalized companies with a focus on growth. As a result of this adjustment, the current positioning has clearly become more defensive.

As in January, Swiss equities were again in high demand in February, which meant that our equity strategy Swiss Equity Selection was able to make further gains. While financial stocks such as UBS and Partners Group came under slight pressure, the heavyweights made gains. Nestle, for example, was celebrated with a price jump of over six percent following the presentation of its annual figures. The pharmaceutical giants Novartis and Roche also continued their upward trend and are in clear uptrends. We remain convinced that we are very well positioned here.

High-growth quality stocks and thus also our equity strategy Global Equity Selection came under slight pressure. This is mainly due to share price falls following the presentation of the results for the fourth quarter of 2024. Although there were many record results to report, investors sold off some stocks. However, the high share price gains of the last two years put the picture into perspective. However, our investments in companies such as Fortinet, Booking Holdings and Constellation Software are unimpressed by the current setbacks and are still in clear upward trends. In the long term, we continue to see good opportunities for quality stocks, also against the backdrop of the AI Artificial Intelligence megatrend.

What next? And what needs to be considered?

“Deal or no deal?” This question will continue to keep the markets on tenterhooks, particularly with regard to Trump’s trade policy. Even if we have to assume that Trump wants to reshape the world order in many areas, we are fundamentally confident that Trump will show a willingness to make compromises that make sense in terms of trade policy. At the same time, there is of course a risk that his policies could have unintended consequences. Further volatility is therefore to be expected. However, the resilience and adaptability of markets and companies should not be underestimated, as we have seen time and again in the past. AI will continue to be an important topic. Investors tend to underestimate the long-term effects of new technologies – and at the same time overestimate them in the short term.

To summarize: all these circumstances are putting pressure on risk appetite. Safe havens such as gold, the Swiss franc, Swiss equities and Swiss real estate are in demand. In this respect, we are very well positioned, particularly in our multi-asset strategies. Caution is still required, at least temporarily, especially with highly valued US equities. Investors should keep an eye on the overall allocation of their assets these days. Nobel Prize winner Harry Markowitz famously described diversification as “the only true free lunch in investing”. In this context, longer-term planning is also an important success factor.

Point Capital Group
5. March 2025

Our experts: Jules Kappeler (CEO) & Christian Sutter (Portfolio Manager)