By: Graham Wainer
The reshaping of global trade relations has been the dominant market driver in recent months. After imposing unexpectedly severe tariffs in early April, President Trump has since pivoted towards negotiation and de-escalation, reducing the associated economic costs. As we noted in our April Outlook, “given the multiple constraints facing the administration, a reprieve in trade hostilities can restore expectations for US economic and corporate health from extremely low levels.”
Risk assets appear to agree, staging a strong recovery following the sharp decline in the wake of ‘Liberation Day’. Global equities have returned 10.0% in the first half of 2025. Relative to other regions, the US market has regained momentum. In the second quarter, the S&P 500 returned 10.9% in USD, compared to 3.7% for the MSCI Europe ex UK index in Euros. Mega-cap US tech stocks, which led earlier declines, have found their footing once again. However, the US dollar remains under pressure, with erratic policy signals, softer growth expectations, and fiscal concerns prompting investors to diversify away from dollar-denominated assets. Such US Dollar weakness has weighed on returns for global investors.
In this July Investment Outlook, we explore some of today’s central market themes in depth, focusing on the outlook for the US dollar and equity markets following a prolonged period of ‘exceptionalism’ but weaker returns this year.
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