By Silvano Grimaldi, CEO of the independent asset management firm Grimaldi & Partners AG.
Quarterly Review
International equity markets ended the fourth quarter of 2025 with gains.
1. Solid Corporate Earnings Growth
- Better-than-expected Q3 results and robust corporate outlooks, particularly in the United States.
- Earnings growth broadened beyond the major technology companies.
2. Monetary Policy Tailwinds
- Inflation rates continued to decline.
- Expectations of, and initial moves towards, interest rate cuts supported lower discount rates and higher equity valuations.
3. AI- and Technology-Driven Investment Cycle
- AI-related capital expenditure remained high, particularly in data centres, semiconductors and cloud infrastructure.
- Technology and communication services stocks delivered strong performance.
4. Easing Recession Fears and the Soft-Landing Narrative
- US economic data remained resilient.
- Europe experienced fewer negative economic surprises than initially feared.
5. Seasonality and Market Positioning
- The traditional year-end, or “Santa Claus”, rally supported equity markets.
- Portfolio rebalancing, window dressing and capital inflows into equities provided additional momentum.
Quarter Summary
Fundamental factors—including corporate earnings, monetary policy and AI-related investment—combined with a favourable macroeconomic and market-sentiment environment during Q4 2025.
The effect was particularly strong in the United States, with a delayed but clearly positive impact in Europe as well.
Stocks in Focus
Roche Surges 26% on Pipeline News and Ocrevus Approval
Roche gained 26% during the final quarter, supported by positive pipeline developments and regulatory progress.
The company delivered strong clinical momentum through positive data for the breast cancer treatment giredestrant and the US approval of the subcutaneous form of Ocrevus.
In addition, the Evrysdi royalty transaction with Royalty Pharma strengthened confidence in Roche’s future cash-flow generation.
Sandoz Gains 23% on Biosimilar Growth and Higher Margin Guidance
Sandoz gained 23% during Q4, supported by the expansion of its biosimilars business and an improvement in its margin outlook.
The company’s Q3 update included higher margin guidance, while the European launch of the denosumab biosimilars Jubbonti and Wyost reinforced its growth prospects within the biosimilars market.
The shares consequently recorded a significant gain over the quarter.
Outlook – 1st Quarter 2026
Opportunities
- Central-bank tailwinds: The FOMC meetings on 27–28 January and 17–18 March, the ECB meeting on 18–19 March, and the Bank of England meetings on 5 February and 19 March could support valuations if accompanied by dovish guidance or potential interest rate cuts.
- Earnings momentum: During the Q4 2025 reporting season in January and February, FactSet expects earnings growth of approximately 8.3% for the S&P 500 in Q4 2025 and around 15% for 2026. Positive earnings surprises could provide further support to equity prices.
- Energy and inflation relief: OPEC+ is expected to pause production increases until March 2026, potentially easing short-term pressure on oil prices, input costs and inflation.
Risks
- Persistently high inflation: US CPI releases during the quarter could weaken expectations of interest rate cuts if inflation exceeds forecasts.
- Oil-price and geopolitical shocks: Policy changes or supply disruptions surrounding the OPEC+ meeting on 4 January 2026 could push energy prices higher.
- Earnings disappointments against elevated expectations: If corporate guidance and Q4 results fail to support the higher earnings estimates for 2026, markets could experience profit-taking.
Performance Expectations
For Q1 2026, we expect a slightly positive trend in international equity markets.
- Earnings as a tailwind: Earnings per share are expected to grow by approximately 8% in Q4 2025 and around 15% in 2026. Higher earnings estimates could support valuations at the beginning of the year.
- Lower energy prices could ease inflation: The EIA forecasts Brent crude oil at approximately USD 55 per barrel in Q1 2026, potentially reducing cost pressures and inflation.
- Supportive policy and liquidity conditions: Market participants expect further monetary easing by the Federal Reserve during 2026, while continued investment in artificial intelligence remains an important cyclical driver.
Stock in Focus: Sandoz
This publication is provided for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any financial instrument. Past performance is not indicative of future results.
