Monthly comment May 2025

Index

• Markets
• Economy
• Geopolitics
• Conclusions
• Allocation
• Market data
• Event calendar

Markets

May 2025 marked a sharp rebound in global financial markets, helped by a temporary easing of trade tensions after the Trump administration decided to delay the introduction of new tariffs, initially planned not only for Europe but also for China, Mexico, and Canada. Although the environment remains fragile, this pause has contributed to a sharp recovery in investor confidence, particularly in equities. In the United States, the S&P 500 rose 6.2%, while the Nasdaq gained 9%, driven by a strong rebound in technology stocks, particularly those belonging to the so-called “Magnificent Seven,” which had suffered a particularly negative April.

In Europe, indices benefited from reduced trade tensions with the US and expectations of an interest rate cut by the ECB: the STOXX 600 closed the month up 4%, the German DAX gained 6.7%, the French CAC 40 gained 2.1%, the Italian FTSE MIB closed up 6.6%, while the Swiss SMI recorded a more modest 0.9% gain.

Gold ended May unchanged, settling at around $3,300 an ounce, essentially unchanged from the start of the month. After strong gains in previous months, the yellow metal continues to be supported by institutional demand, geopolitical uncertainty, and expectations of possible monetary easing. The Swiss franc lost some ground against the euro, with the EUR/CHF exchange rate returning to around 0.93, while the dollar remained stable at 1.135 against the euro.

Bitcoin experienced significant volatility, pushing above USD 112,000 during the month and setting a new all-time high, before closing in the USD 105,000 range. The movement was supported by growing interest from institutional investors and changing regulatory prospects in the US, which helped improve market sentiment towards cryptocurrencies.

In May, US government yields rose across the curve, reflecting scaled-back expectations for a rate cut in the near term. The 10-year Treasury closed the month at around 4.40%, up about 25 basis points from April. On May 29, public pressure from President Trump for a rate cut clashed with Jerome Powell's firm stance, who reiterated the central bank's independence. The possibility that new tariffs will push inflation higher in the coming months is a further reason for caution on the part of the Fed.

Economy

On the monetary policy front, the major central banks have adopted a cautious approach, influenced by the still uncertain impact of new tariffs on inflation and economic activity. In the United States, the Federal Reserve kept its benchmark rate unchanged at 4.25%-4.50% for the third consecutive meeting, emphasizing that trade tensions are increasing risks to price stability and growth.

In Europe, the European Central Bank left rates unchanged, with a 25 basis point cut expected at the June 5 meeting, reflecting gradually slowing inflation and economic growth that, while still positive, is showing signs of moderation. The Bank of England moved early with a 25 basis point reduction, bringing its benchmark rate to 4.25%, while the Bank of Japan confirmed its current stance but acknowledged that the scope for further rate hikes is narrowing.

Geopolitics

May 2025 was marked by significant geopolitical instability, which affected both markets and global risk perception. The month began with a serious escalation between India and Pakistan, leading to large-scale military exchanges following a terrorist attack in Kashmir. For the first time, the two countries used armed drones in a regional conflict, raising concerns about possible nuclear escalation. After intense fighting and international pressure, a fragile ceasefire was reached, but tensions remain high along the border.

In Eastern Europe, tensions between Russia and Ukraine remain elevated, despite the resumption of direct negotiations in Istanbul and the largest prisoner exchange since the start of the war. However, these developments have not been enough to resolve the conflict, which continues to weigh on investor sentiment and the regional economic outlook.

Donald Trump also returned to the media spotlight: in May, the US President announced his intention to lift some sanctions against Syria and met with Syrian leader al-Sharaa in Saudi Arabia, marking a turning point in US international relations. Trump’s statements—often unconventional and centered on a return to a unilateral approach—have added to the uncertainty among allies and markets, already on edge due to the numerous ongoing crises.

Conclusions

During the month, we increased our equity exposure, bringing it to overweight mainly by reducing liquidity. The geographical allocation of equities remained unchanged from the previous month, with the US underweight and Europe overweight. Our position in gold was moved back to neutral after its recent positive performance. In the bond market, we continue to maintain a shorter duration than the benchmarks, awaiting the upcoming inflation data releases in both Europe and the US, as well as the monetary policy decisions of the Federal Reserve and the European Central Bank.

In our view, volatility is likely to remain high in the coming weeks, in a context where statements by key political leaders—as demonstrated by Trump’s recent remarks—continue to trigger strong reactions in equity markets. In this environment, we favor a flexible and rational management approach, ready to review our positions should conditions change rapidly. 

Allocation

Liquidity

Bonds

Equity

Precious metals & Commodities

Geo-tactical allocation

Switzerland

Western Europe ex Switzerland

North America

Latin America

Asia Pacific

Top sectors

1. Financials
2. Utilities
3. Industrials

Market data (data as of 31.05.2025)

Event calendar

Legend