Global markets are in a tough spot, caught between geopolitical tensions, shifting monetary policies and sector-specific trends. European and Chinese stocks have been climbing, while U.S. equities are under pressure, weighed down by tariff concerns. Trump’s return to office has fueled uncertainty, leaving investors on edge. The big question is how much of his aggressive rhetoric is just a negotiation tactic – both domestically and internationally. Meanwhile, falling oil prices and strong demand for gold suggest investors are bracing for a more uncertain risk environment.

Additionally, geopolitical developments, including ceasefire negotiations in Ukraine and ongoing tensions in Gaza influence market sentiment and commodity prices. Market volatility has surged, with the “VIX” volatility index reaching its highest level since August 2024. The U.S. Economic Policy Uncertainty Index has also hit its highest level since the COVID-19 crisis, which marks its second-highest peak ever.

However, amid all the uncertainty, it’s easy to overlook the fact that most other markets, including Swiss and European equities, have held up remarkably well since the start of the year and posted solid gains. Chinese stocks are currently leading the pack globally, followed by Swiss and European markets. A globally diversified approach is proving particularly rewarding at the moment.

• Tariff Uncertainty & Economic Slowdown: The U.S. equity market has been on edge amid renewed trade war tensions and growing fears of a potential “Trump-cession.” Recent tariff announcements, particularly those targeting Canada and Mexico, have added to market volatility, with investor anxiety reflected in the elevated VIX volatility index. Concerns are mounting that ongoing tariff uncertainty could ultimately push the U.S. economy into a Trump-induced recession. However, we believe these concerns may be somewhat overstated at this stage. Trump’s stop-and-go approach to tariffs and other policies suggests that much of the uncertainty could be strategic rather than structural. Meanwhile, fundamental corporate data remains solid, offering a more stable backdrop than headlines suggest. The coming months will provide a clearer picture of where the economy is truly headed.
• European and Chinese Growth Optimism: European and Chinese markets have been gaining traction, benefiting from increased fiscal stimulus measures and improving macroeconomic conditions. The Euro Stoxx 50 and German DAX have posted double-digit gains year-to-date, while the Hang Seng Index has also rebounded. The YTD performance for Swiss and EU indices remains clearly positive.
• Central Bank Policies: The European Central Bank has initiated a rate cut cycle, though uncertainty remains regarding the timing of future moves. In the U.S., the Federal Reserve has signaled a “wait-and-see” approach, with at least two rate cuts anticipated later in the year. The Swiss National Bank’s long-term yield curve is also shifting to reflect changing inflation expectations.
• Oil Prices & Commodities: Crude oil prices have fallen to multi-month lows, influenced by trade uncertainties and expectations of reduced demand. Conversely, gold continues to be a safe-haven asset. It rose more than 7% YTD, fueled by monetary easing expectations and increased demand for bullion-backed ETFs. Gold’s bull run remains intact, as investors continue to seek protection from macroeconomic risks.
• Ukraine Conflict and Ceasefire Negotiations The U.S. has brokered a 30-day ceasefire proposal, which Ukraine has accepted. However, Russia has attached conditions to its participation, including Ukraine renouncing its NATO ambitions. The situation remains highly uncertain, particularly given Russia’s battlefield advances. There are high doubts about its commitment to implementing such a ceasefire. Markets remain sensitive to further developments, especially regarding European energy security.
• Gaza Ceasefire and Humanitarian Situation: The ceasefire between Israel and Hamas remains fragile and humanitarian conditions continue to worsen. The situation has the potential to impact investor sentiment in Middle Eastern markets and affect global oil prices due to possible disruptions.