Stock market outlook 05/2025: skid marks in the USA

May 7, 2025

What has been the focus in recent weeks

These were the dominant themes: Solid corporate results for the first quarter of this year and announcements from the US government regarding trade agreements with many countries. At the same time, the US economy sent out a remarkable signal – US GDP fell in the first quarter. However, it should be noted that many companies acted cautiously in the context of the tariff announcements, making this data difficult to interpret. Meanwhile, the US labor market remains robust.

All of this led to sharp rallies in many previously fallen investments, which surprised the pessimists. A so-called “risk-on” mood prevailed. However, the fact that gold continues to be in high demand as a safe haven shows that uncertainties regarding further developments in and with the US remain. The weakness of the US dollar also fits into this current picture.

Our investment solutions and positioning

Our multi-asset solutions were able to make up for much of the decline at the end of March / beginning of April. This was not least thanks to our significant positioning in gold and Swiss real estate. Our fixed-income investments also proved their worth once again. Swiss government bonds also recorded further gains, while international bonds provided a stabilizing element. Once again, we can see how important diversification across different asset classes can be for short-term performance.

The more defensive orientation of our Global Equity Trends strategy has continued to pay off. Even in the current recovery phase, companies with low volatility or a high dividend yield have performed very well. However, developments in recent quarters have now led to shifts in the longer-term trends. We have recently disposed of high-growth companies in the technology and consumer goods sectors. The portfolio now includes utilities and value stocks from the industrials, raw materials and basic materials sectors.

In our equity strategy Swiss Equity Selection the new additions Swisscom, SPS Swiss Prime Site and Galenica have performed very well. All of them lived up to our expectations and performed very well in volatile phases. In addition, the insurance stocks Swiss Re and Zurich Insurance Group were among the clear winners. Of the Swiss index heavyweights, Nestlé held up best. This is because the pharmaceutical giants have come under greater pressure due to the tariffs. Even though the portfolio is currently somewhat more defensive, we expect to be able to benefit in various market phases.

With a view to the equity strategy Global Equity Selection equity strategy, the focus in recent weeks has clearly been on companies’ quarterly results. With the exception of P&G Procter and Gamble, market reactions to the results have so far been positive. The slight decline at P&G (-4%) is mainly due to the weaker outlook from management. However, in the current market phase and in view of the uncertain consumer sentiment, this is not surprising. On the other hand, Microsoft and Resmed (medical technology) were celebrated with share price gains of 7 % and 10 % respectively. The review of the reporting season is clearly positive for our stocks. We are currently holding a slightly higher cash ratio. However, when opportunities arise, we do not hesitate to reinvest them in promising companies.

What next? And what needs to be considered?

Although it is extremely difficult to interpret the current economic indicators correctly: The US government must now deliver and it is to be hoped that Trump has not gambled away. Comprehensive and, if possible, open-ended trade agreements with the most important trading partners are needed quickly. Uncertainty is high everywhere and is making planning more difficult for companies. Many investments have been postponed and people are taking a wait-and-see approach.

In addition, US consumers will soon be faced with partially empty shelves for certain product groups in the supermarket. Around 80% of toys, for example, come from China. And there have been some remarkable developments here in recent weeks: Container shipments from China to the USA have really slumped. This will of course also have a negative impact on inflation – prices for such products are rising.

There is therefore a high probability that various economic data will deteriorate in the coming weeks, which will put the government under pressure. As is well known, the markets generally anticipate developments, meaning that a positive scenario is already largely priced in. This in turn makes the markets susceptible to negative news and so volatility will continue.
Even if “tariff deals” are made in the short term: It cannot be assumed that sustainable stable conditions will be established in the short term with regard to trade policy between the US and its trading partners. This argues for a focus on high-quality investments, gold and a diversified investment strategy in the coming months.

What should not be underestimated, however, is the great ability of companies and even entire economic areas to adapt to changing conditions. Political players are also coming up with unexpected surprises, for example in the form of previously unimaginable investment programs. All of this shows that long-term investors who focus on quality have the best chance of continuing to be rewarded attractively.

Point Capital Group
7. May 2025

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