Market Update - Key take-aways from our webcast: Geopolitical Conflicts and Tariffs: Managing Market Uncertainty - 10 July 2025

Highlights: A week after Liberation Day, the US administration gave countries a 90-day reprieve to negotiate trade deals. As that period has now ended and several countries have received letters with new tariff levels, we held a webinar to assess the situation and examine the market implications. Our view is that tariffs will remain more elevated and volatile than before, as they are a policy tool to achieve many objectives. In spite of the economic headwinds resulting from the tariffs, we think global economic and earnings growth will remain positive, with many pockets of interesting opportunities. As a result, we remain invested but focused on quality, diversification and active management, to balance volatility management with the discovery of opportunities.

• The panel suggested that the US-China trade relationship has seen a tentative stabilisation and could now see gradual step-by-step progress. That said, our strategy is to remain selective, focusing on technology-led innovation and high dividend payers, with some additional opportunities in select consumer goods thanks to trade-in programmes
• The EU is hoping that not receiving a letter with a trade tariff is a good sign, but it is unclear where the tariff will eventually end up. Sectoral tariffs – for example on pharmaceuticals – are a key variable as well. The outperformance of European stocks compared to global benchmarks already faded in April and we hold a neutral view, preferring the US instead
• The US faces headwinds from the inflationary impact of the tariffs, but we still expect two Fed rate cuts this year. Bond markets also offer attractive real rates and term premia to compensate investors for uncertainty. Tech stocks may continue to lead as IT is seen as a strategic sector where the US wants to continue to lead. Industrials and communication benefit from this strength in tech, as well as the US objective to re-onshore production
• As for USD, we expect only mild further weakness. The US policy is more interested in maintaining the reserve status than in weakening the USD to gain competitiveness