Investors balancing in tense second quarter
An unexpected stock market crash on Liberation Day, the threat of war in the Middle East, and a dollar that appears to be losing its status as a safe haven. The second quarter of 2025 was anything but summery. Nevertheless, most stock markets managed to recover, although the picture varied greatly depending on the region and currency.
Markets recover after abrupt start
The quarter got off to a turbulent start when Donald Trump announced substantial trade tariffs in early April. The markets reacted sharply, with equities falling worldwide. The subsequent easing of these measures brought some calm, and later in the quarter many share prices recovered. On balance, global equities posted a quarterly return of around 3%, although the recovery was unevenly distributed.
US equities performed relatively strongly in local currency terms, but a sharp decline in the value of the dollar (more than 3 percent in June and as much as 10 percent since the start of the year) meant that returns for European investors were disappointing. European equities lost ground in June and underperformed over the quarter as a whole. Real estate and high-yield bonds were positive exceptions, delivering reasonable to good returns.
Economic uncertainty beneath the surface
Behind the fluctuations on the stock market lay a deeper area of tension. The US economy remained seemingly resilient, with low unemployment and rising wages. But beneath the surface, there was more uncertainty: trade conflicts and geopolitical risks were beginning to take their toll. The IMF lowered its growth forecast for the global economy from 3.3 to 2.8 percent, mainly due to the United States.
The status of the US dollar also crumbled. Traditionally, this currency gained strength during geopolitical tensions, but this time there was no flight to safety. The combination of budget deficits, doubts about leadership, and possible taxes on foreign investments is making foreign investors more cautious. They are looking for alternatives, such as Europe, but there too, the necessary political and economic leadership is still lacking.
Outlook: fragile balance in uncertain times
The coming months will be dominated by the need for balance. On the one hand, central banks remain alert to inflation, which has fallen but is still above target. On the other hand, there is the risk of an economic slowdown. The ECB appears to have finished cutting interest rates, while the Fed may still be considering further steps, depending on growth, inflation, and political developments.
Trade policy remains an important factor. New agreements between the US, China, and Europe may temporarily calm the situation, but it is likely that they will be less favorable than the old situation. At the same time, increasing government spending, especially in the US, could lead to new inflationary pressures in the long term.
Investors would do well to remain alert. The economic playing field is changing rapidly, and political upheavals can suddenly impact markets and currencies. The summer months, traditionally quieter, may offer some breathing space. But beneath the surface,
The surface continues to simmer. The key question is what will weigh more heavily in the coming period: geopolitical tensions or monetary policy. The answer will determine how solid the ground beneath investors' feet remains.
ProfitShield: peace of mind in turbulent times
In a quarter that began with sharp corrections and ended with geopolitical tensions and currency losses, ProfitShield did exactly what it was designed to do: provide protection. Where traditional strategies often move entirely with the market and are exposed to currency risks, ProfitShield offers a balanced counterpart with built-in buffers and a clear risk profile. This brings peace of mind, especially when the market is anything but calm.
In the first quarter of 2025, ProfitShield fell by 2.15%, compared to a loss of 4.2% for the S&P 500 index. In the second quarter, ProfitShield recovered by 5.6%, while the S&P 500 rose by 10.5%. This difference is explainable: ProfitShield limits upside potential due to its pre-determined return cap, but in exchange offers powerful protection against declines. This strategy clearly came into its own during the correction in April, when ProfitShield's maximum drawdown was limited to -8.5%, compared to no less than -26% for the S&P 500. It was precisely during this deeper phase of market stress that the value of the peace of mind ProfitShield can offer investors became apparent.
This quarter, the emphasis was on variants with broader protection, up to 35% downside, in line with the increased uncertainty. This defensive positioning provided stability without completely exiting the market. ProfitShield uses Buffer ETFs that help limit losses while taking advantage of rising markets to a fixed return. This makes the system attractive to investors who want to preserve capital but still want to continue investing in a targeted manner.
Important to note: ProfitShield's returns are calculated without currency effects. The weak US dollar, which fell by more than 3% against the euro in the second quarter, has therefore not been taken into account. Similarly, in 2024, when the dollar gained considerable strength, the positive currency effects were not taken into account. We are assuming a normalization on the currency front, but at the same time we are actively seeking solutions to limit currency risks as much as possible.
ProfitShield is ideal for use as a separate and supplementary module in any portfolio. It can be easily combined with offensive strategies, allowing investors to strike their own balance between return and protection. Especially in times of geopolitical friction, fluctuating inflation forecasts, and a shaky dollar, the system provides a robust foundation and, perhaps more importantly, gives investors something that is rare in turbulent markets: peace of mind.