Political and economic environment
For the financial markets, 2025 was characterised by volatile developments, diverse influencing factors and changing market sentiment. A turbulent start to the year, triggered by extensive US tariff announcements by the new American president, initially led to increased uncertainty, noticeable price falls and a tense trading environment. However, the international markets stabilised as the year progressed, supported by the US Federal Reserve's continued expectations of interest rate cuts and a partial easing of geopolitical tensions. These conditions characterised the dynamics of the various asset classes throughout the year.
Several countries - including Germany, the USA and China - significantly increased their national debt, particularly as a result of high spending on defence and infrastructure, in some cases under the suspension of fiscal rules such as the debt brake.
Global stock markets performed unevenly. The prospect of a continued loose monetary policy supported market sentiment for much of the year. Investments in artificial intelligence were a particular focus, which primarily benefited US technology companies and their suppliers along the value chain. A noticeable sector rotation set in towards the end of the year: Capital flowed from US technology stocks into more defensive sectors such as healthcare, consumer staples and utilities. The Swiss equity market was supported by this market development, as it traditionally has a higher weighting in the pharmaceutical sector. Emerging market equities received additional impetus from the weakened US dollar, which strengthened their export economy and increased their international competitiveness.
The bond markets presented a mixed picture over the course of the year. The Swiss National Bank lowered its key interest rate to zero per cent in June, while the US Federal Reserve made several interest rate cuts up to December to support the economy, prioritising the labour market over the risk of inflation. The interest rate reduction cycles in Switzerland and Europe have largely come to an end, which points to a prolonged phase of low interest rates. Accordingly, yields on Swiss bonds remained at a low level.
Inflation declined over the course of the year, albeit at a slower pace. Central banks adjusted their monetary policies to the changed economic situation and inflation expectations. Geopolitical tensions and the performance of the US dollar had a significant impact on the capital markets. Precious metals such as gold and silver recorded significant price gains and benefited both from their role as safe havens and from the weakness of the dollar.
The Swiss property market showed a tense picture in 2025. There was largely no new construction impetus on the rental housing market, which did not sufficiently alleviate the vacancy rates that have been falling for years. The lower number of building applications dampened hopes of a growing supply, although weaker immigration due to the economic situation slightly reduced the pressure. In 2025, office-to-residential conversion projects in urban centres gained momentum - they helped to counteract the housing shortage. At the same time, demand for office space declined due to gloomy economic expectations. The persistently low interest rate environment once again channelled a lot of capital into property investments.