Tareno View October 2025

A promising start to the fourth quarter

The global economy is once again proving its resilience, despite high US tariffs and political uncertainty. As the Fed resumes its easing course, corporate profits are receiving an additional tailwind. The signs are therefore good that share prices will continue to rise. There are still many stocks worth buying, for example in the healthcare sector, where structural growth and solid balance sheets are convincing. The downside of monetary easing is falling yields on liquidity and bonds. This increases the importance of alternative investments in portfolios. Fortunately, there are also diverse and promising investment opportunities here, as you can read in the last part of our Tareno View.

Macroeconomic environment

The Teflon boom

Despite all the adversities of recent years (real estate crisis in China, war in Ukraine, wave of inflation, record rise in interest rates, concerns about sovereign debt), the global economy is growing steadily at around 3% per year. Although the tariff shock is also leaving its mark, it can hardly cause the global economy to falter. Countries particularly affected, such as Switzerland, are also proving resilient and should avoid a recession even if the tariff rate of 39% remains unchanged.

On September 17, the US Federal Reserve lowered the key interest rate by 0.25 percentage points in anticipation of a possible stronger economic slowdown. At the same time, it signaled further interest rate cuts this year and next. The leading central bank has thus given the green light for a continuation of the global cycle of interest rate cuts.

The European Central Bank and the Swiss National Bank are likely to have ended their cycle of interest rate cuts for the time being. With the expected further cuts by the US Federal Reserve and the resulting melting away of the interest rate advantage, the US dollar is likely to continue the depreciation that began at the start of the year.

A look at the purchasing power parity shows that the US dollar is still overvalued despite the recent devaluation. In view of the increasing loss of confidence, a valuation premium against the Swiss franc does not appear justified and a structural weakening of the USD is likely.

Market commentary

Good prospects

Despite customs uncertainty, global profits continue to grow robustly, led by the US technology leaders. These are benefiting from the unbroken tailwind of artificial intelligence. As AI investments are expected to continue to rise significantly in the coming year, AI stocks are likely to remain the driving force on the stock market, with positive spillover effects along the entire value chain.

For the coming year, we expect earnings growth to be more broadly supported by additional sectors. Interest rate-sensitive sectors in particular should regain momentum after a long dry spell. In view of the historically high valuation differences, we believe it makes sense to review the sector allocation. We prefer a diversified allocation to the cluster risks of many indices.