March 2025 began with a volatile yet cautious tone across global financial markets, influenced by several key geopolitical and economic factors. The month started with gains on European markets, particularly in France and Germany, driven by optimism around new investment initiatives aimed at modernizing infrastructure and upgrading defense capabilities in the wake of growing geopolitical risks and uncertainty surrounding the US commitment to NATO. However, these gains quickly dissipated as tariffs started to become effective, leading to a reversal in the positive momentum.

February started on a strong note for US financial markets, with an upward trend driven by strong earnings reports and investor optimism about the global economic outlook (principally US). It seemed like the US was prepared for another solid quarter, but that quickly shifted towards the end of February. A correction, caused by concerns over US trade policies, particularly the tariffs that the Trump administration was preparing to impose, led to a negative performance for the month.

The inconclusive, yet long held belief that markets become inefficient in January and easy money can be made could gain more believers this time around. The month ended at +2.93% for the S&P 500, largely above the January average, despite all the uncertainties surrounding the new US President and the various policies he has and will continue to implement.

The year started strong, with running months of strong positive performance, justified by good Q4 2023 corporate results and inflation which seemed to come under control. In fact, by the end of Q1 2024, you could have sold all your equity portfolio and locked in the performance of the annualized long-term return on the equity markets.

By now, it is old news that Trump won the race and will have quasi-unchallenged powers. Indeed, besides the presidency, which he won with a greater margin than back in 2016, Republicans took over the Senate and the House in a so called “red sweep”, showing once again the limits of polls when it comes to predicting outcomes of very polarized elections.