Diversification trends are playing out
Signs of a de-escalation in the Middle East helped calm markets last week, with oil prices falling and market sentiment improving, which supported equities, with the S&P 500 reaching a new record.
The Middle East, the US and the market
The Middle East is still the focus of global markets as the conflict between Israel and Iran continues. The key piece of news is that, over the weekend, the US intervened as well, supporting Israel. Against this volatile geopolitical backdrop, equity markets continued to decline while oil prices rose in anticipation of disruptions in the oil market.
The Middle East and the market (2025 edition)
In the last bout of escalation, Israel struck Iran last week, targeting its nuclear programme and military facilities, which has raised tensions in the Middle East as Iran is retaliating. Oil prices jumped in the biggest intraday move in the last ten years, now settling above USD70 per barrel, after prices traded below this level for almost a year. Gold prices rose, too, while equities fell moderately.
Tariffs continue to take centre stage
Last week, tariff-related developments continued to dominate financial markets. After the market relief in response to President Trump’s postponement of EU tariffs, investors were surprised on Wednesday by a ruling from the US Court of International Trade (USCIT). The USCIT stated that President Trump has overstepped his authority by using emergency economic powers to raise tariffs.
Markets focused on the US tax bill, and tariffs again
Last Friday, tariffs came back to the forefront with Trump saying that a 25% tariff must be paid by Apple if phones sold in the US are not made in the US, and “recommending a straight 50 % tariff on the European Union” from 1 June, before swiftly extending trade negotiations until 9 July after a conversation on Sunday with European Commission President Ursula von der Leyen.
Trade talks boost markets
There’s been a welcome swing in market sentiment since the agreement between the US and China to reduce tariffs for the next 90 days. Compared to the sky-high numbers announced in April, this agreement marks a notable de-escalation in tensions. That said, it’s only a 90-day reduction (with uncertainty about what comes next), which still leaves tariffs at historically high levels not seen since the 1940s.
Counterpoint May 2025: Diversification opportunities amidst uncertainty
During our recent rebalancing, we opted for a ‘roughly neutral’ equity stance in lower-risk profiles and a slight overweight in riskier ones instead of fully reinstating our previous overweight. This helped us benefit from the equity recovery in late April and early May.
Markets refocus on possible trade deals
April was a rollercoaster month in financial markets, starting with the announcement of the US trade tariffs on 2 April which led to an equity sell-off. The market moves we witnessed were truly historic in their speed, compounded by the subsequent retaliation from China.
Tariffs and markets, your questions answered
On April 15, we hosted a special 30-minute webcast focusing on the impact of US tariffs on the global economy and markets. Our speakers were Daniele Antonucci, Chief Investment Officer at Quintet, and Bruno Rovelli, Chair of EMEA Allocation Council Investment Solutions at BlackRock. We received many questions during the webinar.
Our latest thoughts on tariffs and volatility
Over the past week, financial markets experienced significant volatility primarily due to abrupt shifts in US trade policy. Although President Trump announced a 90-day pause on the reciprocal tariffs, the 10% overall tariff is still in place and the ‘trade war’ with China has escalated.
Counterpoint April 2025: Navigating tariffs and volatility
The US recently introduced broad tariffs, triggering retaliation from China and the European Union. This escalation brings risks to growth and inflation. Uncertainty around tariff implementation, often driven by sudden announcements and reversals, has been more damaging to sentiment than the tariffs themselves.
‘Liberation Day’ in America: our thoughts on market volatility and trade tariffs
The US finally announced broad tariffs on key trading partners on 2 April, bringing effective US tariff rates to levels not seen in a century. These measures include a baseline universal rate of 10% as well as targeted reciprocal tariffs, which range from 10% to 50%.
The European fiscal spending theme gains momentum
Last week, both German chambers, the Bundestag and Bundesrat, approved a constitutional amendment with over two-thirds of the votes. This decision allows for a 10-year defence budget and a 12-year infrastructure funding plan.
Our approach to navigating volatile markets
At the start of 2025, many investors believed that US President Trump’s policies would extend US economic and market exceptionalism. Now, two and a half months later, US equity indices have dropped about 6%, with the dollar being down 4.5%, and Treasury yields have fallen a quarter-percent.
2025 Alternatives Investment Outlook
Looking back at 2024, it's evident that our investment landscape is constantly changing. What lessons have we learned, and how can we better position ourselves for the opportunities and challenges of 2025?
Changing leadership - Counterpoint March 2025
US tariffs, market fundamentals and geopolitics have caused a change in leadership in 2025: European equities are now outperforming their US counterparts due to improving corporate earnings relative to expectations, more attractive valuations and newly announced government spending, including for defence and infrastructure.
Our 2025 mid-year outlook
Emerging trends
The global order is becoming more fragmented and regional, a key shift from US-centric geopolitics to a more multi-polar world. Trade uncertainty remains high and is causing market volatility, but there are also signs of pragmatism, which provides some relief to investors. Our base case remains one where economic growth and inflation slow. But, unless a full-blown ‘trade war’ materialises, the global economy should avoid a recession and a significant spike in prices.
