Monthly Report August 2025

Market Development in August 2025

Most international equity markets continued to rise in August. The only exception was the German DAX, which declined by 0.7% in EUR over the course of the month. The S&P 500 and the MSCI World Index climbed by 2.0% and 2.6% in USD, respectively, reaching new all-time highs. The MSCI Emerging Markets Index also increased by 1.5%. Driven by two heavyweights, Nestlé and Novartis, which rose by 6% and 7.4%, respectively, the Swiss equity market (SPI) gained 2.3%, while the mid and small cap index (SPI Extra) remained flat. At the annual central bank meeting in Jackson Hole, US Federal Reserve Chair Jerome Powell acknowledged that risks to the labor market are increasing — a signal interpreted by market participants as paving the way for a rate cut in September. Accordingly, US interest rates declined slightly toward the end of the month, giving a boost to bond investments. After three months of consolidation, the gold price also gained momentum again with a 4.8% increase in USD.

Introduction of High US Tariffs on Swiss Goods

On August 7, 2025, the 39% US tariff on many Swiss export goods officially came into effect. The Federal Council's additional negotiation efforts have so far failed to produce the desired results. Switzerland is currently pursuing further negotiations and refraining from countermeasures, in hopes of reducing the base tariff rate. Measures to support the export-dependent Swiss economy are also under consideration. Shortly before the deadline, President Trump extended ongoing trade talks with China by another 90 days, through November 9, 2025. Without this extension, US tariffs on Chinese goods would have risen back to 145%. As it stands, the US continues to impose 30% tariffs on Chinese imports, while China maintains 10% tariffs on US imports. At the end of the month, a US appeals court ruled that President Trump exceeded his authority by imposing country-specific tariffs under the current legal framework — declaring these tariffs unlawful. However, sector-specific tariffs on steel, aluminum, or automobiles remain unaffected, as they are based on a different legal basis. The court’s ruling will not take effect until October 14, 2025, allowing the US government to appeal to the Supreme Court, which it has already done. For the time being, the country-specific tariffs remain in effect, but the court’s ruling weakens the US government’s position in the ongoing trade dispute.

Fund and Mandate Performance

Following the very strong performance in July, most Format investments experienced a slight pullback in August. Many companies that posted outstanding gains in July paused and consolidated, which negatively impacted the relative performance of the Format equity strategies. Discussions with corporate management confirmed that for the vast majority of companies, no direct implications from the new US tariffs are expected. Global Bonds (F) and Balanced Plus (F) posted gains of 0.7% and 0.3%, respectively. Year-to-date performance for the funds and mandates can be accessed via the link below.

Outlook

In addition to the further developments in the US tariff conflict, investor attention will be focused on the latest US labor market data and the interest rate decision expected from the US Federal Reserve in mid-September. It will also be important to observe whether the new US tariffs have already had an impact on inflation.

Best regards
Matthias Hug and Markus Lackner

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