Market Outlook and Strategy
March 2025
The beginning of 2025 has been marked by market volatility, driven by expectations of smaller benchmark rate cuts and the economic impact of the trade war under President Trump’s new administration.
We share a summary of the key movements:
Market performance
In the U.S., the S&P 500 and Nasdaq are down 4% and 9% year-to-date (YTD), respectively, affected by monetary and tariff uncertainty. In contrast, the Euro Stoxx 50 has risen 12% amid the potential for a peace agreement in Europe, while China has rebounded by 24% due to stimulus measures and improved outlooks.
Monetary policy and valuation
In terms of monetary policy, U.S. inflation remains above the Fed’s target, prompting the market to adjust expectations, with between one and two 25 basis point (bps) rate cuts anticipated in 2025. Additionally, the S&P 500 valuation remains high, with a forward P/E of approximately 20.7x.
Strategy and positioning
We maintain our positive tactical stance on large-cap equities, although we anticipate episodes of volatility due to market sensitivity to tariffs and high valuations.
Key events to watch:
- Tariff policies under Donald Trump’s new administration.
- Inflation trends and potential benchmark rate cuts ahead.
