Market Insights July 14, 2025

Europe: The verdict is in.

Trade tensions have once again taken centre stage. Europe is now in the crosshairs: its exports will be taxed at a rate of 30% starting August 1^st. This tariff, significantly higher than the one announced in April, signals a clear hardening of the US position. It also marks a setback in the negotiations, likely reflecting Donald Trump's dissatisfaction with the lack of progress. The European Union’s response will be crucial for the future of these talks, but reaching a unified stance among the 27 member states remains a delicate task.

Following the rebound in European markets over recent months, this more aggressive announcement could weigh on investor sentiment. European markets, which are particularly sensitive to uncertainty, may remain volatile in the coming weeks as they await further clarity in this standoff. In this context, domestically focused sectors such as banking, tourism, and leisure appear to be better positioned. In any case, Donald Trump is maintaining his aggressive tariff policy, but how far the markets will allow him to go remains an open question.

United States: a lack of visibility calls for caution!

Following a sharp drop of over 20%, the technical definition of a bear market, and an equally striking rebound, US equities displayed extreme volatility in the second quarter, as Donald Trump sent mixed signals to financial markets. The announcement of prohibitive tariffs on imports into the US, last-minute reprieves for trading partners, and a flurry of presidential decrees all contributed to a significant decline in market visibility and a rise in uncertainty regarding economic growth. As the second quarter begins, the economy appears relatively resilient, yet the first signs of a slowdown are clearly emerging. Activity indicators are weakening, the labour market is gradually deteriorating, and economists have broadly downgraded their forecasts since January.

And yet, US equity indices have recently reached new all-time highs, reflecting a certain complacency among investors. This excessive optimism is also evident in corporate earnings growth forecasts for 2025, which appear significantly overstated given the current context. At these levels, US equities seem far less attractive, particularly when compared to the rising yields of other assets such as bonds. As a result, a significant outperformance of the S&P 500 over the next three months appears unlikely. This third quarter will also mark the expiration of the grace periods granted by Donald Trump to his trade partners to negotiate new “deals.” It is also unlikely that Trump will extend these deadlines beyond the August 1^st cutoff. As a result, the summer could see a resurgence of volatility and a renewed wave of downward revisions to growth forecasts.

Over the longer term, the outlook appears more encouraging. In our view, a US recession still seems unlikely, as the Federal Reserve retains considerable room to ease monetary policy and stimulate the economy. Indeed, that is what it is preparing to do this fall, provided that tariffs do not trigger a significant rebound in inflation, which finally appears to be under control.

Given the important upcoming deadlines and the potential disruptions, they may cause in the markets, we have chosen to temporarily reduce our exposure to US equities. This adjustment comes near the indices' all-time highs, a level conducive to profit-taking. 

This week’s figure: USD 123’205

After a month and a half of consolidation and a normalization of sentiment toward it, Bitcoin is rising again and has reached a new all-time high. It is benefiting from the support of the new US administration, which aims to ensure that the United States remains at the forefront of technological development linked to the rise of digital currencies.