The trade conflict initiated by Donald Trump is the main driver of this year's capital market development. The massive tariff increases at the beginning of April led to a phase of high volatility and uncertainty, which eased in May but is by no means over. The markets continue to react sensitively to political signals and trade talks, with corresponding price fluctuations.
In May, Trump announced a 90-day tariff pause with China, which boosted the markets in the short term. An initial trade agreement with the UK was also announced, albeit on a limited scale. Nevertheless, the situation remains tense. Although the tariffs have been temporarily lowered, they have not been lifted, and uncertainty about future developments continues to weigh on the economy. During the current reporting season, there are frequent reports of a challenging environment. Company bosses are currently sceptical about both the outlook and possible investments.
Reorganisation on the stock market?
The global equity market is in a rebalanced environment, characterised by regionally divergent developments and the increasing importance of diversification. While the major US technology stocks, which have dominated the market in recent years, are struggling with some significant setbacks in the current year, other regions and sectors are experiencing a surprising renaissance.
Europe is one of the clear winners. After years of underperformance, European equities are benefiting from an improved macroeconomic environment and a weaker US dollar, which is boosting profits for international investors. These international investors are also increasingly questioning the reliability of the USA as a safe haven and are finding an attractive alternative in Europe. In addition, Germany is rethinking its debt policy, which is seen as a growth driver for the entire region.
The Austrian stock market is showing its best side
Despite the country's weak economic performance, the Austrian stock market is also showing its best side. A key driver for Europe as a whole, but especially for Austria, is the hope that the war in Ukraine will end soon. A peace agreement would reduce the general uncertainty and strengthen the economic environment in the region, which would particularly benefit Austria as a traditionally close partner of Eastern Europe. Another positive impulse comes from Germany. The announced investment package provides for significant investments in infrastructure, digitalisation and armaments. Austrian companies are well positioned and can benefit from this. The strong performance of the financial sector should also be emphasised. Following the customs shock at the beginning of April, Austrian financial stocks recovered at a rapid pace, lifting the ATX to new highs for the year.
Author:
Karin Kunrath, Chief Investment Officer at Raiffeisen Capital Management
28 May 2025
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Note
Wiener Börse AG would explicitly like to point out that the data and calculations given in this report are historic values, which do not permit any conclusions as regards future developments or value stability. Price fluctuations and loss of capital are possible in securities trading. The contribution is the personal opinion of the analyst and does not constitute a financial analysis or a recommendation for investment by the exchange operating company, Wiener Börse AG.