Filenews 3 November 2025
As the end of 2025 approaches—a year marked by a series of significant political and economic events—financial markets are approaching November with caution. Between the expected decisions of the major central banks, the continued shutdown of the US government and the discussions about the new seven-year budget in Europe, investors are moving in a fog of uncertainty.
In the United States, the Fed has made the second cut in interest rates, as part of the monetary easing that began in September. As the first anniversary of Donald Trump's victory in the presidential election approaches, investors fear a new political uncertainty in the United States. The Republican administration remains at odds with Congress over federal funding, while the Supreme Court is scheduled to reconsider the legality of the tariffs imposed by the White House on Nov. 5. In Europe, the situation is not at all clearer. In France, budget debates have become bogged down in a fragmented National Assembly. In Germany, the economy stagnated in the third quarter. According to preliminary calculations by the Federal Statistical Office, GDP "increased" by 0% compared to the previous quarter.
However, things look more optimistic in 2026 and the factors are as follows:
First, the way the world's leading economy avoids the recession that seemed inevitable in early 2025—thanks in large part to massive investments in AI. Second, the U.S. and to some extent the entire global economy are benefiting from the stimulus provided by the Federal Reserve's interest rate cuts. Fed rates are at their lowest level in three years. This lower cost of money will continue to stimulate the U.S. economy. Third, the trade war sparked by Trump entering the White House may have been a reality, but last week it was tempered by the one-year partial truce agreed between the US and China.
The two superpowers have eased tensions over rare earth elements, with Beijing suspending export restrictions on these valuable components, widely used in the tech sector, for a year. They also agreed to suspend port duties on both sides of the Pacific, a measure that will benefit other partners as well. Fourth, and just as important, is the reactivation of important bilateral investment agreements, such as the agreement between Washington and Tokyo to create a $550 billion fund for Japanese investment in the United States. However, Washington will have the final say on these investments in the US.
Finally, when it comes to the private sector, experts predict a 13.4% increase in profits for listed European companies in 2026 and a 12% increase on Wall Street next year. The outlook is particularly favourable for Europe, where analysts predict a 13.4% increase in earnings for the Stoxx 600, compared to 12% for the S&P 500. Expert estimates indicate that combined net profits among S&P 500 companies will exceed $2.4 trillion during fiscal year 2025, representing a year-on-year increase of nearly 10%.
Source: Naftemporiki
