Nerves on edge

A new year means analysing the previous year.

What developments have the financial markets seen in 2025, and what do they mean for European investors? Bryan Ferrari and his guests take a look at everything from equities and energy to artificial intelligence.

Julien Ensch is Head of Client Relationship Management at Spuerkeess Asset Management. Nick Huberty and Julien Kohn are both Portfolio Managers at Spuerkeess.

Bryan Ferrari: 2026 has arrived. What happened on the markets in 2025?

Nick Huberty: My nerves are on edge as the year draws to a close. We've been through a lot. The year began with the Deep Seek shock in the United States. We realised that we could develop an AI at a lower cost and more efficiently, creating competition for ChatGPT and Gemini. This was not the best news for Nvidia. That's why we didn't see the same performance as the Nasdaq in the first three months of the year… Well, things turned around relatively quickly after that, for one simple reason: when you impose customs duties on physical objects, it favours a company that provides IT services.

Julien Ensch: I think the highlight was Liberation Day, when Donald Trump stood in the garden of the White House with his beautiful sign, listing all the countries with the tariffs he was going to impose. This came as a bit of a shock to the markets, especially for European stocks, as many of these tariffs were directed against Europe. After that, the good performance that Europe had achieved in the first few months was curbed somewhat. But it was mainly the first half of the year that was tough. Since then, things have been a little calmer.

Julien Kohn: But let's not forget the situation we were in a year ago. The big question was what the future would look like for Europe. Everyone was extremely positive about the United States, but few people were positive about Europe. That's why it was surprising to see Europe outperform. Tariffs too… Today, they're almost a non-issue. If you look back at the time they were announced, we all broke out in a cold sweat, and things quickly turned around. You can see how fast the markets move and also how we, as humans, can repress certain things depending on the circumstances.

Nick: I also think that something is distorting the picture a little. If we look purely at performance, the European broad indices have performed extremely well, with gains of 16 or 17%. But this performance was primarily driven by a few isolated sectors, especially banks. In other sectors, such as defence and commodities, we are talking more about a price readjustment, or even wishful thinking in places, because Europe is failing to grow earnings. In the United States, profits are up by 10% this year. Of course, we mustn't forget that, in the US too, this rise in profits is concentrated in a few specific technology companies that are still growing extremely strongly, and the average of their companies is also closer to 0 than to this 10%. But overall, there is still more growth in profits across the country.

Bryan: Europe and the emerging countries have performed well this year, but that's based on the fact that they were cheap. In the US, the results were there. How do you see this trend developing?

Julien Kohn: If you listen to what is being said, the sector is still very bullish on everything American. All the analysts are still positive, and for good reason. The big technology stocks have had explosive results. We are now entering a cycle in which the Federal Reserve, the US central bank, is continuing to cut interest rates. The US economy, contrary to what everyone thought, is still relatively good. That means there's nothing to stop US equities performing well.

Nick: What next year looks like depends on a multitude of factors. Stock market performance is based on the competitiveness of companies in a given country, and that competitiveness is quite simply the result of the know-how, motivation, and opportunities of the people who work there. Unfortunately, the US still has a young and talented population, and it can attract the right people, give them a place to develop, and help them with fewer regulations, with a "we're more direct" and "we're not afraid to make mistakes" attitude. This is a problem we have in Europe, because if you want to do something well, you have to have made mistakes beforehand. It's only natural. And they have the capital market behind them to back it all up; they have both the engine and the fuel. As soon as we have an engine, all of a sudden, the service station is closed. That's our structural problem. And not just here, but partly in Asia too. For the future, the United States still has a structural advantage.

Julien Ensch: Above all, it also has the political will to continue to support the economy. Donald Trump's One Big Beautiful Bill aims to attract all companies to the United States. Many European companies are heeding this call and investing massively in the United States to produce locally, which is positive for their growth. On the other hand, the expectations for the A.I. by 2026 are still there. So there's no reason for anything to change. Quite the contrary, because other sectors will benefit. Massive investments are planned in everything from data centres to infrastructure.

Bryan: In 2025, equity markets performed very well. However, European investors who invested too much in the US were punished…

Julien Kohn: Yes, that's something we're not used to. Usually, the dollar helps us. There are a number of reasons for this. One of them is probably confidence in the United States, which has disappeared a little for investors, who have withdrawn from there, all the same. This has created a big loss for the dollar. We are currently at 1.16. This means that, as things stand, it's hard to say where we're going. The Euro-Dollar exchange rate is hugely important.

Nick: The fact that the euro is stronger is also a headwind for European companies. This favourable wind doesn't lie in being at 1.16. Since the launch of the Euro, the historical average has been somewhere between 1.15 and 1.20. We've been at 1.20. At 1.21 too. We were at 1.17 or 1.18 before Covid. That's nothing extraordinary. What is extraordinary is the speed with which we went from 1.94 to 1.15. It's like driving a car into a tree. The question is: at what speed? At 5 km/h, it's not a problem. At 50 km/h, it's a problem. And that's where it hurts, not only for the investor, but also for the company.

Bryan: This weak dollar has had an impact on commodities, where we've had an excellent year. Copper (Doctor Copper) has hit all-time highs. Is this purely geopolitical? Why is that?

Nick: The price of copper is more a question of supply and demand. We need it a lot at the moment. Gold and silver are about fear. Gold is up 60% and silver even more. This is very probably due to a loss of investor confidence in central banks and their independence. The problem is that something like a precious metal never has a fair value, because it doesn't produce cash flow. You can't say that because gold profits are up 60%, it makes sense for the price to go up 60%. That's speculation about the future.

Julien Kohn: Demand has also risen because silver metal is used more in certain sectors. Everything from solar panels to electric cars… The same goes for copper. But supply has not kept pace. To date, there is no mine dedicated to silver. Economic theory says that if something goes up in price, more players should enter the market. That's more difficult here. You can't build a mine overnight. It takes a bit of time.

Bryan: A lot of individual investors have invested this year based on announcements from the White House. What has the US government done differently in 2025 than in recent decades?

Nick: That's a point we've forgotten when it comes to gold. The government has been more volatile in its statements, and that has raised doubts, also because of the discussion about the independence of the Federal Reserve. This led some players, notably the Chinese, to allocate a smaller proportion of their reserves to US Treasuries and buy gold instead. It has had a big impact when such a giant player is on the market. That's something we sometimes forget; we always think in terms of individual investors, but it was mainly institutional money that probably also received a boost from US policy.

Julien Ensch: Yes, what we do know is that it was mainly central bankers, and also a lot of those in emerging countries, who bought gold on a massive scale and continue to do so. Rare metals are politically driven. But it's not just the White House. It's also the Chinese, who have become a little more aggressive in their rhetoric. I think we generally have a kind of race going on at the moment in terms of electrification, where everyone needs these rare metals, whether it's for their electric cars, for solar or other things. Everyone is looking for these metals. And unfortunately for us Europeans, we don't have many of them here in Europe either. One of the biggest producers is China, and they have noticed that they can now use this argument to put pressure on other countries when they don't like something. It was a threat they brandished against the United States.

Bryan: So it's all a bit more focused… It's all about geopolitics.

Julien Ensch: We shouldn't forget either that the United States has a huge debt. They still have the confidence of the market, but for how long? And they are also aware of this. Historically, we always seen that when major powers start to have problems increasing their debt, more and more geopolitical instability arises. I think we're currently in such a phase, and tech stocks are masking the overall picture.

Bryan: Trump has announced that he is working on A.I. regulations, because at the moment, each state has its own. That doesn't please the Republicans, who want it to be homogeneous. It's like China, where one state dictates how things are done. China has this advantage, as well as that of energy. The experts all assume that the winner in terms of A.I. will be the one with the cheapest energy in abundance.

Julien Ensch: I had to swallow my words when I saw that Donald Trump wanted to bring out legislation to regulate this. At first, I thought he was being very critical of Europe, but that he was now going to copy it. Well, I don't think he'll go as far as Europe. It will probably remain very pro-I.A. and pro-business. In that sense, I think it's actually a good thing.

Nick: Energy is a crucial issue. The cheaper the better. But I think fear is overrated when it comes to energy costs.

Julien Kohn: What we're seeing now is that a lot of data centres are moving to countries where there's more sun. In the USA, they're moving to Texas, but we're also seeing brand new Tech Hubs being set up in Portugal and Spain. Simply because we have a lot of sun, we can create a lot of energy to power these data centres. Atomic energy is also making a comeback… especially in the USA.

Bryan: For years, we had an accommodative monetary policy in which central banks bought securities (Quantitative Easing) to keep interest rates artificially low and stimulate the economy. Then central banks decided to implement Quantitative Tightening and structurally withdraw part of the liquidity that had been injected. Now, a few weeks ago, the Federal Reserve announced that they were stopping this. Is this relevant for the coming months?

Nick: It was already relevant this year. I would venture to say that there has been no easing of monetary policy in the eurozone this year. We had anticipated an easing, but in the background, the central bank stopped reinvesting the maturities of the last quantitative easing programme, the pandemic programme. This means that there has been a restrictive monetary policy on the market. Hence, my bold statement. Last weekend, Emmanuel Macron began to say that the ECB should change its mandate and reduce this quantitative tightening, i.e. the contraction of its balance sheet. Here again, it's always a relative story. How fast do I withdraw liquidity from the market? This speed has been relatively sporting on the part of the European Central Bank, and the effect is clear. Long rates, which last year were at an attractive level, are now just over 3%. This is having a real impact on the economy. The Americans have stopped reducing their balance sheet… We in Europe haven’t taken that step yet.

Bryan: That means we won't be missing out on risky assets over the next few months, because on the bond side, there won't be much to take…

Julien Ensch: It depends on your risk profile. We have a certain return on the bond side, but we should definitely have risky assets. The keyword is equities. We should have some in our portfolios, because companies are expected to grow in 2026. Equities, especially US equities, should continue to perform well. But you can never be sure of a little surprise, and with bonds once again offering a higher yield, they can act as a shock absorber.

Bryan: The last thing I'd like to highlight is the end of the safe-haven rhetoric surrounding bitcoin.

Julien Ensch: What is Bitcoin? It's a question at the centre of a lot of discussions. For me, it's always been something apart. People talk about currency, money, something similar to gold… It's everything at once. I think Bitcoin is living its own life. People say it performed badly in 2025, but you have to put that into perspective. It was flat, but not catastrophic. Volatility is nothing exceptional for a risky asset. Personally, I've always found it hard to see Bitcoin as a safe haven, because I've never understood exactly what it's supposed to be.

Bryan: It's a question of speculative assets, because speculation has done extremely well this year. Quality, in other words, companies that produce things we need and have predictable cash flows, on the other hand, haven't done very well this year.

Nick: Quality means a company that over the long term has a comparative advantage, a high return on the capital it has itself invested in its business. Historically, this factor has outperformed and, in my opinion, it will continue to do so. Earnings and share price trends are aligned. Rarely in the short term, but always in the long term. Recently, however, we have seen a huge underperformance by these stocks, which have seen their growth weaken slightly, but which have been punished disproportionately by the stock market. Will this normalise in the medium term? In my opinion, yes, unless all these quality companies one day cease to be quality companies and are replaced by other things.

Julien Ensch: I think that any type of investment can sometimes have a period when it doesn't work so well. Quality companies are companies that we consume every day. This means that we have a certain predictability when it comes to the consumption and growth of these companies. That's why they are generally very popular. It is often said that these are stocks that you can put under the Christmas tree, because they will continue to rise. So there's no need to panic now because, for once, these stocks have performed a little less well.

Nick: Except for pharma stocks… They've been underperforming for a long time. Tech is different. Google had a great year, Microsoft is also very stable, but it's precisely these names that we mean by Quality. Not only are they immensely profitable, but they also have a business model built on recurring revenues. Dishwashing liquid is automatic once it's empty. For my Cloud, I pay every month if I want to keep using it. It's hard to pass that up.

Julien Ensch: Pharma is indeed a sector that has had problems recently. It has also suffered from the fact that we had Covid, where companies invested massively in products or drugs to combat Covid, and forgot about the rest. As a result, there was a shortage of new drugs in the pipelines. But we can see that things are coming back, so we can position ourselves more positively for this sector in the future. New things are coming.