Stock market outlook 07/2025: Middle East escalates – stock market remains cool

July 3, 2025

What has been the focus in recent weeks

The escalation in the conflict between Israel and Iran has been the focus of attention in recent weeks. The international financial markets have generally moved sideways and have been little impressed by this development. A limited escalation was generally expected, which was already priced into prices. In addition, the markets have generally become more resilient after all the crisis experiences of recent years.

The weakness of the US dollar continued in June, reflecting the crisis of confidence in the USA, in particular the rising national debt.
In Switzerland, the SNB’s interest rate decision was eagerly awaited, but there was no big surprise: The key interest rates were lowered to 0% and have therefore not yet reached negative territory. Low interest rates are generally positive for most asset classes.

Our investment solutions and positioning

Our multi-asset solutions remained almost stable in June, although Swiss government bonds and Swiss equities lost some ground. The high proportion of Swiss francs had a positive effect. While the euro remained stable against the Swiss franc, the US dollar again came under strong pressure. Overall, the current positioning can be described as neutral.

The equity strategy Global Equity Trends equity strategy also remained just about stable. Defensive investments such as consumer staples and stocks with low volatility came under more pressure than technology or communications stocks, for example. As a result, we took a more offensive stance at the end of the month and added small-cap stocks as well as quality stocks to our portfolio. This change also led to a slight reduction in the proportion of US dollars.

Once again, the performance of the equity strategy Swiss Equity Selection was strongly influenced by the heavyweight Nestlé – unfortunately not in a positive sense. On the other hand, smaller companies such as Galenica and BKW performed very well. The Swiss equity market is currently lagging behind in an international comparison. Nevertheless, we see good opportunities for our stock selection in the second half of the year.

Our equity strategy Global Equity Selection equity strategy generally performed well last month, although the advances were held back by the weak US dollar. In the long term, however, we expect significant upside potential from our stock selection, so that the effect of a currency devaluation will be limited in the long term. With the upcoming half-year review, there could also be some movement in the portfolio in the coming weeks and new stocks could be added.

What next? And what needs to be considered?

Geopolitical tensions and the turmoil surrounding US tariffs are likely to have peaked. Global economic growth has also remained in positive territory, while inflation remains under control. The potential for further interest rate cuts by central banks – particularly the Fed, the US central bank – also remains intact. All of this is fundamentally positive for most asset classes.

However, the next big test will be the corporate earnings reporting season for the second quarter. Even in an environment of increased US tariffs, we continue to expect greater earnings strength from US companies compared to companies in most other markets. But of course there are question marks over this forecast, as there is still a great deal of uncertainty about the specific impact of the tariff-related turbulence.

Against this backdrop, we are neutrally positioned in our multi-asset solutions and gold remains an important cornerstone as a stabilizing element. In the equity sector, we favor quality stocks and continue to focus on the long-term potential of individual companies.

Point Capital Group
3. July 2025

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