From a seasonal perspective, July is often a favorable month. This was also true in July 2025: The MSCI World Index in EUR rose during the month under review, driven by positive developments on the US stock markets. European markets, on the other hand, performed weaker in July. At the sector level, technology stocks were in high demand worldwide, while pharmaceuticals/healthcare and consumer staples stocks disappointed. In Europe, the banking sector was the clear outperformer in July (as it has been since the beginning of the year), while the technology, food, and automotive sectors performed poorly.
We remain constructive about the markets in the medium term. Looking ahead to August 2025, however, it is conceivable that conditions on the markets will become somewhat more difficult and that the stock markets will weaken slightly. On the one hand, August and September are traditionally weak months from a seasonal perspective (especially in the year following a US presidential election). However, caution is advised in the event of a renewed escalation in the tariff dispute, triggered by very high punitive tariffs on countries that source energy commodities from Russia. In the medium term, earnings prospects in the US are likely to be better than those in Europe. Donald Trump's “Big Beautiful Bill” could lead to significant growth in the US economy and US earnings in 2026. On the monetary side, the US Federal Reserve is now expected to cut interest rates again in September. In the past, periods of moderate interest rate cuts in the absence of a recession have been good times for the stock market. Artificial intelligence remains one of the main growth drivers of the US economy. The situation in the consumer/staples sector, on the other hand, is much more difficult. Regionally, selected emerging markets continue to offer opportunities.
Opportunities that we see:
Technology sector attractive: Among the more aggressive sectors, technology continues to look interesting, particularly in the areas of artificial intelligence and software.
Outlook for 2026 – US economic and earnings performance: Thanks to Trump's “Big Beautiful Bill,” the US economy and US earnings are likely to perform well overall due to tax breaks, the possibility of special depreciation allowances, and high levels of investment.
Infrastructure remains a long-term issue: Government and corporate spending on infrastructure—especially in the energy sector—remains high, regardless of the tariff dispute. Well-positioned companies are benefiting from this.
Japan and Japanese banking and insurance stocks: Japanese stocks have generally underperformed expectations so far (the situation looks slightly better in EUR than in JPY). However, we remain positive about Japanese financial stocks, mainly due to expected positive interest income and good credit growth in foreign business.
Emerging markets remain selectively promising: Emerging markets (EMs) are generally benefiting from a weaker US dollar. India is lowering interest rates, is largely unaffected by US tariff policy, and many companies are reporting strong business performance. For China, increased fiscal stimulus by the government is positive, with the government now taking on more debt (record new government debt in 2025). Many emerging markets are confident in the tariff conflict and aware of their strong position.
Selected European mid caps (MDAX) are selectively interesting from both a technical perspective (MDAX vs. DAX) and a valuation perspective.
Risiks that we see:
No agreement in the trade dispute with China and very high tariffs on countries that import energy from Russia. Geopolitics therefore remains a risk.
Seasonality: From a seasonal perspective, August and September (especially in years following presidential elections) are difficult or negative months.
Pharmaceutical sector: Following a period of very weak performance, the sector is now relatively inexpensive. However, if the US government implements the so-called “MFN” (Most Favoured Nation) act and reduces the price of drugs to the price in the cheapest country globally, this would threaten the existence of some companies. It would lead to significant drops in profits and massive cuts in R&D budgets.
Consumer sector, including staples: A recession in the consumer sector is looming in the US. The back-to-school season could disappoint.