DeepSeek and Trump strain investor nerves.

Our view on the markets and investment strategy in the February 2025 Market Compass.

Highlights Include

DeepSeek Shakes Up Silicon Valley

The Chinese AI start-up DeepSeek has made headlines with its new AI assistant, challenging the dominance of Silicon Valley tech giants. Developed at significantly lower costs, DeepSeek’s technology triggered a sell-off in the semiconductor sector, with Nvidia (-10.6%) and Broadcom (-4.6%) among the biggest underperformers in January.

ECB Cuts Rates, Fed Holds Steady

While the European Central Bank reduced its policy rate by 0.25% to support a slowing economy, the US Federal Reserve maintained its key rate at 4.50%. Fed Chairman Powell emphasized that strong economic activity and persistent inflation leave no urgency for monetary easing in the US.

Swiss Market Hits Record High

In contrast to the semiconductor sector’s struggles, the Swiss equity market surged to new highs in January, with the SPI index up 8.2%. Companies like Richemont (+28.4%), Logitech (+21.9%), and UBS (+16.6%) led the rally, attracting renewed interest from international investors.

Trump’s Tariffs Stir Market Volatility

US President Trump announced new import tariffs on major trading partners, including 25% tariffs on Mexico and Canada and 10% on China. This unexpected move raised concerns about a potential global trade conflict, contributing to heightened market volatility.

Market Outlook for 2025

Despite increased volatility, fundamentals remain supportive, particularly in the US, where Q4 2024 earnings growth is projected at 13.2%, the strongest since Q4 2021. We maintain a neutral stance on global equities and continue to favor high-quality fixed income and gold as strategic hedges in this uncertain environment.

Ready to dive in? Download the full PDF of our February 2025 Market Compass

for a detailed analysis and forward-looking guidance on navigating today’s financial markets.

Do not hesitate to contact us with any questions about the topics discussed. We are happy to assist you with our expertise.