By Silvano Grimaldi, CEO of the independent asset management firm Grimaldi & Partners AG.
Monthly Review
International equity markets ended January 2025 with gains.
Driving Factors
Expectations of Federal Reserve interest-rate cuts: Investors anticipated future interest-rate cuts by the Federal Reserve, increasing the attractiveness of equity investments.
Strong corporate earnings in the technology sector: Major technology companies such as Apple, Microsoft, Meta and Tesla reported impressive quarterly results, strengthening investor confidence and pushing share prices higher.
Optimism surrounding the Trump administration’s economic policies: Expectations of tax relief and deregulation during President Donald Trump’s second term supported market optimism.
Investment in artificial intelligence: Continued enthusiasm surrounding artificial intelligence and related investment generated significant gains for companies active in this field, particularly major technology groups.
Positive economic data: Better-than-expected indicators, including robust labour-market data and an increase in the ISM Manufacturing Index, signalled a resilient economy and supported equity markets.
A weaker euro supported European exports: The euro’s weakness against the US dollar made European exports more competitive and supported the shares of export-oriented companies.
Stock in Focus
Logitech Reports Higher Third-Quarter Earnings and Raises Its Outlook
Computer-accessories manufacturer Logitech delivered stronger-than-expected revenue and earnings during the important holiday quarter.
The company subsequently raised its outlook once again.
Revenue in the third quarter of the 2024/25 financial year increased by 7% to USD 1.34 billion, according to Logitech’s announcement on Tuesday evening.
At constant exchange rates, revenue would have increased by 6%.
The adjusted gross margin on a non-GAAP basis improved by 90 basis points to 43.2%.
Adjusted operating profit, excluding costs related to acquisitions and restructuring, increased by 7% to USD 265.9 million.
Adjusted net profit remained broadly unchanged from the previous year at USD 241.5 million, following the strong recovery recorded in the prior-year period.
Reported net profit amounted to USD 200.1 million, representing a decline of 18% year-on-year.
Overall, Logitech’s results clearly exceeded analysts’ expectations.
Outlook – February 2025
Opportunities
Strong corporate earnings in the technology sector: Positive quarterly results from technology companies such as Microsoft, Tesla and Meta could strengthen investor confidence and support share prices.
Progress in artificial intelligence: The increasing integration of artificial intelligence across multiple industries could improve efficiency and create new business opportunities, particularly benefiting technology stocks.
Resilient economic data: Continued positive indicators, including low unemployment risk and stable economic growth, could reinforce market confidence.
Risks
Uncertainty surrounding Federal Reserve interest-rate policy: The pause in the Federal Reserve’s rate-cutting cycle and persistent inflation concerns could increase market volatility.
Trade tensions under the Trump administration: Potential new tariffs on imports from Canada and Mexico could intensify trade conflicts and place pressure on equity markets.
High market volatility: Rising volatility, as measured by the VIX Index, could increase uncertainty and encourage investors to adopt more defensive positions.
Performance Expectations
For February 2025, we expect a sideways trend in international equity markets.
Stock Recommendation: Logitech
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.
