The recent stock market crash, which began in April 2025, has alarmed investors worldwide. Despite a temporary recovery following the tariff shock, experts warn of a possible overvaluation of optimism and emphasize that the most challenging phase for the stock market may still lie ahead. Here are some of the key risks and factors that both institutional and private investors should consider:
Risks and Factors
Trade Policy and Protectionism
The protectionist trade policy of the US government under President Donald Trump has led to increased volatility in global markets. The introduction of new tariffs on April 2, 2025, resulted in a massive drop in stock prices and heightened uncertainty among investors.
Recession Risk
The decentralized prediction market Polymarket estimates the probability of a US recession in 2025 at 60%, which represents a significant increase from the previous 20%. Goldman Sachs also sees a recession risk of 45% in the next twelve months. These forecasts are based on declining consumer expectations and a decrease in consumer spending, which are seen as signs of an impending recession.
Market Volatility and Investor Behavior
The recent stock market recovery may be viewed as temporary, as the underlying economic conditions remain uncertain. Investors could be preparing for another rally, while others might bet on another crash. Market volatility could be intensified by uncertainty over future political decisions and economic developments.
Bond Markets and Interest Rate Situation
Initially, investors flocked to bonds, which suppressed yields. This was seen as a positive sign for the economy. However, this trend reversed as the bond markets also came under pressure, reflecting uncertainty regarding US fiscal policy.
Strategies for Investors
- Diversification: Investors should diversify their portfolios to minimize risks. This can be achieved through investments in various asset classes such as stocks, bonds, and alternative assets.
- Risk Management: It is important to assess risks and make adjustments as necessary. This can be done through hedging strategies or adjusting the investment structure.
- Information Intake: Investors should continuously educate themselves about economic developments and political decisions to make informed decisions.
Overall, the situation on global markets remains uncertain, and investors should prepare for potential further turbulence.