December 22, 2025 2025 Year in Review

The stock markets experienced a sharp correction in April following Donald Trump's introduction of high and largely arbitrary tariffs. However, they recovered quickly, with AI-driven stocks clearly acting as the driving force. The last two years on the stock market can be described as the age of AI in the stock markets (we also hold a significant number of such positions). Whether this trend, which many describe as hype, will continue remains to be seen. We will discuss this in more detail in our next House View. Today, however, we are keeping up with the times by letting AI write the review.

Big picture: Global equities are near or at record highs by late 2025, supported by resilient growth, robust earnings and expectations of lower interest rates. At the same time, policymakers and investors are grappling with tariffs, fiscal deficits and questions over central bank independence, which keep risk premia fragile.

Key 2025 events: In early April, sweeping US tariffs triggered the largest global equity sell off since the early COVID 19 period, briefly wiping out year to date gains. Subsequent policy softening and early trade deals sparked a sharp rebound, with major US indices hitting new highs by midyear.

Equities and sectors: Technology and AI linked stocks again led developed market gains, though market breadth remained narrow and valuations stretched. Cyclical sectors in some regions, including parts of China and Europe, saw a rebound as inflation eased and global trade stabilized somewhat.

Rates, bonds and credit: Government bond yields fluctuated as investors weighed sticky inflation against slowing growth and the prospect of further rate cuts. Credit spreads stayed tight by historical standards, reflecting strong risk appetite but also raising concern about vulnerability to shocks.

Regional themes: In Europe, financial stability authorities highlighted high equity valuations, pockets of leverage in non-bank finance and sensitivity to US tech earnings. The UK and euro area both faced renewed political uncertainty, but falling rates and selective sector strength supported their markets.

We think this review (max. 20 lines) by Perplexity is the best one out there compared to reviews from other AI platforms, especially since it touches somewhat on international and bond markets. However, it fails to mention gold, which rose 65%. The reviews from the other platforms have other weaknesses, though. Not even one mentions the further significant reduction in central bank interest rates or the weakness of the US dollar, a key consideration for an international portfolio. In our outlook for this year, we described the Swiss stock market as a stable rock in the surf, and we were ultimately right. While the SMI "only" rose by 13%, it rose by 29% in USD terms due to the strong Swiss franc.

As our valued clients know, we have performed exceptionally well this year. We would like to thank our clients for their trust, as well as the readers of our House View, for their continued interest. Today marks the 200th edition of our House View, a milestone we are quite proud of.