2025 began with broad optimism for economic growth, particularly in the US, despite impending tariffs as well as other economic policy changes.

Yet, in the first quarter, US stocks suffered relative to non-US. Optimism further turned to unease in April, as the US stock market fell significantly following the “Liberation Day” tariff announcements. Since then, equity markets have recovered and reached new heights, though current geopolitical events in the Middle East, tariff uncertainty, the US fiscal position, and other potential risks remain.

We are making two changes to our near-term sentiment:

• We are moving our near-term sentiment on US stocks (and consequently also global stocks, of which the US is the largest component) from Neutral/Positive to Neutral. We believe that US market strength (sometimes referred to as part of “American exceptionalism”) is being tested but has not departed. Weare recommending that clients remain with a target of 70% of their total public equity investments allocated to the US.

• We are moving our near-term sentiment on private equity to Neutral from Neutral/Positive, while recommending that clients continue to initiate and build investments in the space. Persistent higher interest rates and economic and policy uncertainty have weighed on private equity, with a difficult exit environment for portfolio investments. Private equity remains a key tool in helping portfolios with longtime horizons meet growth objectives.

Read and Download the full 2025 Mid-Year Capital Markets Update