Global GDP growth slowed to around 3%, with the US expanding at approximately 2% and the eurozone stabilizing, supported by resilient domestic demand.
Q2 2025 saw heightened volatility (Iran–Israel conflict) as renewed US trade tensions and 25% tariffs disrupted global trade flows, dampening sentiment despite resilient US GDP growth.
Equities sold off sharply in April – S&P 500 and NASDAQ declined nearly 10% – driven by cyclical and tech weakness, before rebounding mid-quarter on resilient consumption, strong earnings, fiscal support expectations and global stimulus.
The Eurozone economy remained subdued, with modest growth constrained by fading export momentum and persistent global trade tensions, particularly following renewed US tariff measures.
China’s economy slowed from its strong Q1 pace, as cautious policy, subdued private credit demand, and weakening industrial activity reflected persistent domestic fragilities and intensifying external headwinds.
Conclusion: with a severe recession unlikely, the positive bias on risky assets persists, despite increased volatility and potential conflicts under the Trump administration in the coming months. Active management is essential in a low-growth environment, given heightened disparities across companies and sectors. Credit investments, particularly loans and non-cyclical short-term high-yield bonds offering 7–9% yields, are favoured.
We maintain a positive stance on equities. The current market environment supports an absolute return strategy over a traditional relative value approach.
