At the start of the year, news of the US-led kidnapping of Venezuelan leader Maduro initially dominated the headlines. However, this event had no immediate impact on the financial markets. Many stock indices reached new highs in the first few weeks. The first signs of unease arose from the escalation of the conflict between the US and Europe over American claims to Greenland, accompanied by new tariff threats. In addition, monetary policy came into focus when Donald Trump nominated Kevin Warsh as the designated successor to Fed Chair Jerome Powell. While the prospect of a more restrictive monetary policy was initially received positively by the markets, it led to a correction in the price of gold, which had previously risen sharply.
After a generally solid start to the year, markets came under increasing pressure in February. In particular, the hype surrounding artificial intelligence, which had dominated in recent months, lost momentum. Growing doubts about whether the heavy investments in the new technology would pay off in the long term, as well as concerns that artificial intelligence could displace existing business models—particularly in the software sector—led to a rotation out of technology stocks.
The decisive turning point came at the end of February with the escalation of the Middle East conflict. The war led to a sharp rise in energy prices due to the blockade of the Strait of Hormuz, through which around 20% of globally traded crude oil was transported prior to the outbreak of the conflict. In addition, repeated attacks on production facilities and energy infrastructure significantly impaired production capacities. In this environment, virtually all asset classes lost value in March. Markets heavily dependent on energy imports from the region were particularly hard hit. Emerging market equities came under pressure, as did European and Japanese stocks, while U.S. equities recorded only moderate losses. This is attributable, among other things, to the U.S.’s lower dependence on energy imports. The price of gold also declined in March, weighed down by rising interest rates and profit-taking following a historic rally.
From a quarterly perspective, there was an overall reassessment of risks. U.S. stocks performed the weakest, down 3.68%; the MSCI Europe index fell 1.87%; and the Swiss stock market closed down 2.11% after reaching interim highs. Japanese stocks, on the other hand, gained 2.50%, and emerging markets also remained slightly in positive territory at +0.80%. Global growth stocks lost 7.56%, while value stocks (+2.16%) and low-risk stocks (+1.03%) benefited. Gold recorded a quarterly gain of 8.36% despite interim corrections, while oil posted by far the strongest gain, rising 85.43%.
