Market Commentary 4th Quarter 2025
The reporting quarter was marked by heightened political and geopolitical uncertainty, which weighed on economic activity and financial markets. In the final quarter, particular attention was on the U.S. government shutdown, which extended to more than 40 days and became the longest shutdown in U.S. history, undermining confidence in the country’s political capacity to act. In addition to delays in the release of key economic and labour market data, discussions around potential job cuts in the public sector further increased uncertainty. At the same time, early signs of strain emerged in the U.S. labour market: the unemployment rate rose to 4.6% in November, reaching its highest level since autumn 2021. In parallel, trade tensions between the United States and China intensified. An-nounced tariff increases and retaliatory measures—particularly in the area of rare earths—repeatedly triggered market reactions. Although temporary agreements were reached dur-ing the quarter, fundamental uncertainty regarding the future trade regime remains.
In Europe, economic activity continued to be supported primarily by a resilient services sector, while the industrial sector remained under pressure, particularly in Germany. Gross domestic product in the euro area grew by approximately 1.4% year-on-year. Labour mar-kets remained broadly stable, accompanied by moderate employment growth. In France, discussions surrounding potential early elections contributed to political uncertainty. In Switzerland, GDP contracted by 0.5% in the third quarter of 2025, mainly due to declining exports in the chemical and pharmaceutical sector. A positive development was the tariff agreement reached with the United States in mid-November, under which previously appli-cable tariffs of 39% on Swiss goods were reduced to 15%. However, this preliminary agree-ment still needs to be formalized in a binding arrangement.
On the geopolitical front, the Middle East and Ukraine once again moved into focus. In the Middle East, a ceasefire was agreed, and diplomatic efforts in the Ukraine conflict also in-tensified. However, long-term solutions remain limited at this stage. As a result, the global environment remains fragile and continues to be heavily influenced by political develop-ments.
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