Our positioning: Global opportunities instead of cluster risk

Over the past month, it has become increasingly clear that the punitive US tariffs are not going away. And not only that, they’re significantly higher than the previous base tariffs of 10 percent. There is at least some comfort in the fact that they’re mostly lower than threatened in April, and the financial markets have responded with a sense of relief. Share prices rose worldwide, particularly in Japan, where the Nikkei index has risen by 10 percent since the end of July to reach a new all-time high. The agreement with the USA, settling on a rate of 15 percent in mid-July, was met with a clear sense of relief, especially in Japan’s crucial automotive sector.

Downturn potential on the US stock market

However, share prices also rose sharply on other stock exchanges such as in the USA. The US stock market, as measured by the S&P 500 index, rose 3 percent last month. The tech sector in particular recorded significant price increases, not least due to a strong reporting season. At 15 to 20 percent, earnings expectations for this sector are now very high, which means there’s a great deal of potential for a downturn. This is worrying, given this sector’s dominance on the US stock market. The “magnificent seven” account for around 35 percent of the US market. At the same time, we’re concerned about the higher costs for companies associated with the punitive US tariffs. Although we haven’t seen it yet, it’s highly likely that in the coming months, higher costs will feed into corporate margins and be felt by consumers. This means the outlook for the US stock market remains difficult, which is why we’re maintaining our clear underweight position.

Opportunities for global value stocks and emerging market equities

In light of the downturn potential on the US stock market, we made an early decision to further diversify by adopting an overweight position in global value stocks and emerging market equities. Emerging market equities and value stocks have gained momentum recently. Emerging market equities, in particular, are likely to have benefited from the ongoing US dollar weakness and the latest postponement of the tariff deadline with China. We expect this tailwind to continue for the time being and are maintaining these positions.

Gold as a hedge

Elsewhere, we continue to see opportunities in gold. On the one hand, despite new tariff agreements, trade policy under President Donald Trump is likely to continue causing uncertainty. On the other, looking at the Russia-Ukraine war, the geopolitical situation remains tense. Even though talks are ongoing and a breakthrough has yet to be achieved, it’s now become clear that the risk of failure has increased. Given the high public profile of these talks and positions, any such failure would likely place considerable strain on relations between Europe and the USA. Against this backdrop, we’re continuing to hedge our customers’ portfolios with gold as a proven stabilizer.

Performance of asset classes

Our positioning – Swiss focus