October saw broad market gains as easing US-China tensions and moderating inflation boosted confidence in equities and bonds. Yet with US markets nearing record highs, much of the optimism now appears priced in, leaving limited room for error.

The third quarter of 2025 delivered strong returns across most asset classes, driven by easing trade tensions, AI optimism, and expectations of Fed rate cuts. Emerging markets outperformed, while Europe lagged, with German equities under pressure and French markets proving more resilient despite political uncertainty.

During the summer, global growth remained resilient, supported by strong services activity, though trade frictions, shifting policies, and persistent inflation kept investors wary. Meanwhile, the Federal Reserve signaled a change in risks, leaving the door open to possible rate cuts.

As we close out the second quarter of 2025, markets have proven more resilient than expected amid geopolitical uncertainty and tariff-related fears. Despite this, European M&A activity has cooled markedly, with deal volumes at multi-year lows – though appetite for high-quality assets remains strong.

Markets extended their recovery in May, building on April’s lows as consumer sentiment improved and trade tensions eased, reducing recession fears and supported a rebound in market sentiment.

Markets were volatile in April, as the implications of US trade policy impacted stocks, bonds, and currencies but later rebounded as the administration scaled back its stance, delaying some tariffs and easing tensions with China.

The first quarter of 2025 has highlighted how quickly market narratives can shift amid changing political and economic dynamics. Optimism around US leadership has given way to heightened uncertainty, while Europe has delivered unexpected resilience.

After a strong start to 2025, February saw some of the shine come off the US exceptionalism story. Growing uncertainty about the impact of the US administration’s policy agenda weighed on both corporate and consumer sentiment, and concerns about growth started to re-emerge.

Investors saw a strong start to 2025, with equities and bonds broadly delivering positive returns while underscoring risks associated with U.S. market concentration.