Market Commentary 3rd Quarter 2025
The third quarter of 2025 was characterized by continued strong investment activity in artificial intelligence (AI), set against a mixed economic environment and ongoing trade tensions. In the United States, second-quarter GDP growth was revised upward to an an-nualized rate of 3.8%. The momentum was largely driven by solid consumer spending and a normalization of imports following earlier front-loading effects in the spring.
On the policy front, U.S. trade relations once again took center stage. Framework agree-ments were reached with Japan, the European Union, and South Korea, establishing a base tariff rate of 15%. Negotiations with China were extended for another 90 days in early August. As a result, tariffs of 30% on Chinese imports remain in effect, while China con-tinues to impose a 10% duty on U.S. goods.
Conditions were more challenging for Switzerland. On the 1st of August, the U.S. admin-istration announced a 39% tariff on Swiss exports. Shortly before the end of the quarter, another setback followed as President Trump proposed 100% tariffs on foreign pharma-ceutical products. This could directly impact Swiss pharma leaders Roche and Novartis. However, both companies had already begun relocating parts of their production to the U.S., likely shielding them from the new tariffs. Still, the Swiss export sector remains under pressure, further weighed down by the strong Swiss franc. Export data for July and Au-gust showed a significant decline. On a positive note, private consumption remained resil-ient, supported by a strong labor market and low inflation.
In Europe, conditions improved modestly. Year-over-year GDP growth reached 1.5%, while unemployment remained near record lows. Inflation hovered close to the European Cen-tral Bank’s 2% target. Service sector activity picked up in Germany, Italy, and Spain, while France lagged due to political uncertainty. Meanwhile, external trade remained weak, with new export orders declining for the 28th consecutive month—underscoring the ongoing fragility of global trade dynamics.
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