Highlights
Against an increasingly turbulent geopolitical backdrop, financial markets saw several of the trends from 2025 intensify in January, with the US dollar depreciating and the price of gold breaking records, although the month’s final stretch took some shine off the precious metal.
For equities, one year after the inauguration of the 47th President of the United States, we can see that the apparent “rupture in the world order” has not triggered a rupture in the bull market. It has, however, resulted in a rupture in U.S. equity leadership, which has intensified in recent weeks.
It must be acknowledged that, from an economic standpoint, the overall picture remains stable, with generally positive economic surprises, inflation that hasn't reignited fears, and solid quarterly results for most companies.
Still, political considerations will continue to influence financial markets in the coming months. In principle, the upcoming midterm elections should compel the Trump administration to focus on the cost of living. In practice, we can expect rhetoric to remain highly hostile, particularly in the context of negotiations on the USMCA agreement.
In this context, we are maintaining our investment strategy unchanged but remain alert to any change in trend that could require adjustments to our geographical allocation within equities, for instance. Lastly, after recording its highest annual increase in 46 years, we continue to advise caution with regard to gold prices, which appear to be increasingly subject to abnormal speculative activity.
Bottom line
Our baseline scenario—which anticipates sustained economic activity, but tinged with heightened geopolitical risks—remains unchanged. This continues to argue for a moderate overweighting of equities, while keeping a close eye on our market sentiment indicator, which at this stage does not justify either adding or reducing risk.