Opportunities: Be ready to seize chances in the second half of 2025

Going into the second half of 2025, we see no reason to be overly pessimistic. The current uncertainty means that, alongside setbacks, positive surprises are also possible. Our suggestion is to maintain a neutral equity weighting for now. This way, you have cash available to buy more equities when interesting opportunities arise. 

At which price levels could you consider expanding your equity position again? For this, we look at various factors, including expected company earnings growth and expected equity valuations (price/earnings ratio) for the next 12 months. Based on this, we think the US S&P 500 Index will mostly move within a broad range between 5500 and 6200 points in the second half of 2025. If the S&P 500 moves for an extended period at the lower end of this range, it presents an opportunity for investors to bolster their equity position, as much negative news would be priced in.  

Please note that the range and scenarios we outline for this equity index are based on current figures. These figures can change. When, for example, the economic outlook worsens, analysts may lower their earnings growth expectations.  

At the equity sector level, we prefer healthcare (overweight) and financials (modestly overweight). The healthcare sector is less dependent on the economic cycle, which is advantageous now that growth is slowing down. Financials are more sensitive to economic developments. Nevertheless, we remain moderately positive about financials, particularly in the US. One reason for this is the Trump administration’s plan to deregulate the financial sector. Generally, reduced regulation boosts the profitability of banks and other financial players. 

Thematically, we continue to see opportunities in AI (artificial intelligence), as companies keep investing in AI. But the AI trend is not limited to commercial applications. AI has now also become an important factor in modern defence. Technologies such as AI, initially developed to optimize business processes, are increasingly being used for military purposes as well.  

For you as an investor, this creates the opportunity to support technological innovations that are important for both the civilian world and national security. Do you want to know more about the role of technology in modern defence? Read the article ‘Disruptors.’ 

European governments are going to stimulate their economies with substantial fiscal investments. Think of the massive infrastructure investments announced by the German government a few months ago. Defence spending is also being increased, both in Germany and other European countries. Moreover, Europe has an advantage over the US: low (expected) inflation, which allows the ECB to continue lowering interest rates. We therefore expect economic growth in the eurozone to pick up again in 2026.

So why aren’t we overweight Europe? One reason is that government investments in defence partly benefit non-European companies, such as American firms supplying defence equipment. Consequently, some government investments flow out of Europe, rather than stimulating the eurozone economy. Overall, we currently see insufficient reason to prefer European equities over their US counterparts. We have a neutral regional weighting for Europe, the US, and emerging markets. 

Within the bond portfolio, we have a positive stance on European government bonds. If the ECB indeed continues to cut rates in the second half of this year, European bond prices will rise (bond prices move inversely to interest rates). We therefore believe European government bonds could serve as a compelling alternative to savings accounts (where interest rates are also decreasing). 

Looking at corporate bonds: for now, we prefer corporate bonds with high creditworthiness (investment-grade) over the riskier high-yield segment. But after Trump's ‘Liberation Day’ – when investors started worrying about economic growth – risk spreads on high-yield bonds have risen significantly. As a result, this bond segment is gradually becoming attractive again. At a spread level somewhere between 400 and 500 basis points, it may be interesting to invest more in high yield (assuming a recession will be avoided – if a recession does occur, spreads are likely to rise even further). 

Gold prices have rallied the first half of 2025. Economic uncertainty and geopolitical unrest allowed gold to fully fulfil its traditional role as a safe haven. Despite this price increase, we continue to see upward potential in this precious metal. We have therefore recently added gold to our investment portfolio. Would you like to know more? Read our view on gold. 

Finally: when talking about gold, it’s often also about the US dollar. As gold is traded in dollars, dollar movements also affect the gold price. Do you want to read more about the dollar? Our currency expert Georgette Boele wrote an insightful article about the status of ‘the greenback’ as reserve currency.