Stock markets: Optimism despite poor seasonality

What changes have we made to the portfolios?

The global outlook barely changed in August, and our assessment of financial markets remains nearly identical to the previous month. Consequently, we are making no adjustments to our asset allocation. 

Weak seasonality as a stumbling block?

The summer holidays are over, and traders in London and New York are back at their desks. Typically, this leads to increased volatility in September (see chart). The upcoming, historically poor seasonality is therefore not particularly supportive for riskier asset classes. But is this enough to trigger a significant correction? 

We don't think so. While September may bring some volatility to stock markets, we remain optimistic. On 17 September, another Fed rate cut is expected. The primary reason is likely not political pressure from the US government but rather the weakening labour market in the States. Despite persistent inflation, we believe that further rate cuts are warranted given that real yields in the US are at a very high 1.7%.

This is necessary to support the economy. The USD is likely to continue its depreciation trend; we prefer the structurally attractive CHF and GBP.  

The Calm before the Storm?

Strong earnings season comes to an end

Corporate earnings in the US surged again in Q2 (+13% YoY), with all sectors except basic materials exceeding expectations. However, much of this growth came from banks and tech stocks (followed by biotech and pharma), while the broader market has remained relatively stagnant. In Europe, earnings were also better than expected, but growth remains minimal at 1%. 

We continue to favour emerging markets for equity regions. In particular, we prefer East Asian tech companies, which deliver strong earnings but have significantly lower valuations than their US counterparts. The UK also remains a favourite due to its attractive and affordable sector mix. In terms of sectors, we focus on tech and pharma, pursuing a balanced strategy that considers both the most and least expensive sectors. 

Alternative investments and foreign currency bonds instead of CHF bonds

The yield on CHF bonds remains low at 0.7%. Given the modest return expectations and lack of drivers for significant price gains, we see more attractive opportunities in alternative investments or selectively in foreign currency bonds. 

In alternatives, we currently hold an overweight in gold. We have also built up a position in a hedge fund that specialises in convertible bond arbitrage. Regarding gold, we note that central banks are not as price-sensitive as assumed. For instance, the Chinese central bank has continued to buy gold aggressively despite significantly higher prices. With ETF flows rising again and rate cuts providing additional support, we expect the resistance level of USD 3,400 per ounce to be breached. 

Cat bonds are also becoming interesting as hurricane season begins over the Atlantic, which is likely to increase volatility. While returns may not be as robust as in the past two years, a premium over CHF bonds can still be expected.  

Our Tactical Asset Allocation in September 2025

Looking back on the stock market year 2025, we see unexpected twists and turns, turbulent phases and dynamic markets. But how did our investment theses fare in this challenging environment? Our multi-asset experts wanted to find out more and took a closer look at the three main theses. Here are their conclusions.