US shares surged to record highs after Donald Trump won the US presidential election in November, but the rally has faded in 2025. Stock markets famously hate uncertainty, and the only certainty about Mr Trump's second term is that we will get plenty of that.
Markets fear tariffs on Mexico, Canada, China and the EU could rebound on the US, driving up prices, hitting demand and causing a recession. A slowdown would punish international investors too, many drawn by the success of US tech mega-caps.
The S&P 500 is trailing this year, closing at 5,954.5 on February 28, up just 1.46 per cent year to date. In contrast, the FTSE 100 is up 6.7 per cent, the Euro Stoxx 50 is 11 per cent higher, and Hong Kong’s Hang Seng has risen 17 per cent.
The US has been the worst-performing major market over the past three months, moving sideways as the November’s “Trump bump” fades, says Tom Stevenson, investment director at Fidelity International. “The post-election consensus that ‘America first’ would mean ‘rest of the world second’ has, in stock market terms, been wrong.”
While the US is priced for perfection, markets like Germany have been written off. “When sentiment is that extreme, it doesn’t take much for the pendulum to swing back,” Mr Stevenson says.
BlackRock, the world’s biggest investment manager, has just upgraded Europe, noting its relatively strong start to the year. Jean Boivin, head of the BlackRock Investment Institute, cites easing energy costs, potential fiscal stimulus in Germany, low valuations and possible de-escalation in Ukraine. “With bad news priced in, even small positive developments could help push European equities higher.”
Higher defence spending and further European Central Bank rate cuts could further boost the region, he adds.
Jason Hollands, managing director of London-based financial adviser Evelyn Partners, says early bullishness over potential corporate tax cuts in the US, deregulation and tackling government waste under Mr Trump have faded. “Now investors are focused on his unpredictability, aggressive approach to trade and upending of long-established foreign policy and defence alliances.”
Mr Hollands adds: “While Mr Trump’s statements are often blunt and undiplomatic, his views can also swiftly change, which is disconcerting for markets.”
This anxiety can clearly be seen in the crypto market, with Bitcoin plunging more than 20 per cent, from $104,000 to $85,000 in a matter of weeks. The cryptocurrency again soared on Monday after Mr Trump announced the names of five digital assets he expects to include in a new US crypto strategic reserve, including Bitcoin, Ether, Ripple, Solana and Cardano.
Yet Mr Hollands suggests Mr Trump will be unwilling to overplay his hand. “As a businessman who regards the stock market as a key yardstick for success, he’ll want to land deals he can point to as wins for the US.”
Investors forget, but the US stock market and the dollar slumped in the first year of Mr Trump's previous term, says Paul Jackson, global head of asset allocation research for Europe, Middle East and Africa at fund manager Invesco. “We’re seeing a replay of that but with more chaos, amid tariff threats, government layoffs and a swift reversal of Joe Biden’s policies.”
The University of Michigan Consumer Sentiment Index showed a dip in US consumer confidence in January, plus a large jump in inflation expectations. “So many policy changes in such a short space of time is unnerving for businesses and households and will discourage investment and big ticket purchases,” it said.
Such changes will also make life difficult for the US Federal Reserve, which may be caught between cutting interest rates as growth weakens, or holding them to fight inflation. “I doubt any of this is good for the US dollar or US assets,” Mr Jackson says.
China, Europe offer diversification
US equities already look expensive and heavily concentrated in Big Tech, and may be due a period of consolidation, he adds. “European and Chinese equities look much better value, and I’m not surprised they’re outperforming.”
Europe’s economic performance has been patchy, but could improve as interest rates fall, real incomes increase and defence spending climbs, Mr Jackson adds.
China’s economy has done better than many realise, growing at an annual rate of 5.4 per cent in the fourth quarter. “Yet stock market valuations are well below historical norms, while the DeepSeek announcement served as a wake-up call to those who thought China was lagging in the technology race,” he says.
Charu Chanana, chief investment strategist at Saxo Bank, says markets fear US exceptionalism may be fading as economic data softens and AI momentum cools. “Trump’s tariffs are also weighing on business investment, which may further hinder capital expenditure and growth even if they just remain a negotiating tool.”
However, Tony Hallside, chief executive of Dubai-based broker STP Partners, says the US still remains strong, driven by resilient corporate earnings and innovation, particularly in technology and health care.
A mix of high-quality US stocks, defensive assets like gold and bonds, and select opportunities in Europe and Asia should create a more resilient portfolio and support diversification, Mr Hallside says. “This isn’t a time to step away from US equities but to take a broader view.”
Vijay Valecha, chief investment officer at Century Financial, says a potential peace deal in Ukraine has created “bullish euphoria buying in Europe among some European investors”, particularly in France and Germany. “China is outperforming due to a big uptick in Chinese tech names after the DeepSeek-related narrative, although ongoing property market issues could delay the recovery.”
Investors could up their exposure to these two regions through broad-based exchange-traded funds (ETFs) such as FTSE Developed Europe or MSCI Europe, or the HSBC MSCI China UCITS ETF or iShares MSCI China UCITS ETF.
This isn’t a time to step away from US equities but to take a broader view
Tony Hallside,
chief executive, STP Partners
Mr Valecha also highlights three more ETFs that could offer diversification. The iShares MSCI ACWI ETF invests in a spread of large to mid-cap stocks from top developed and emerging markets. While the US has outpaced all other major developed markets, this ETF can hold its head up. The ETF is still 65 per cent invested in the US, with the remainder spread between Japan, the UK, China, Canada, Europe, Taiwan, India and Australia.
The gold price has climbed another 10 per cent this year to about $2,863 an ounce and Mr Valecha recommends exposure through the SPDR Gold Shares ETF. “As Russia and China dump US Treasuries for gold-based physical bullion holdings, gold remains a good diversification bet.”
Meanwhile, the iShares 20+ Year Treasury Bond ETF is “often cited as the most underrated ETF of all”, he says. “During market turmoil or a recession, long-term Treasury bonds tend to rally as investors seek safe havens. If Fed interest rate cuts materialise or we face a recession, the ETF could enjoy sizeable gains.”
America has been first for years. But investors should not write off the rest of the world just yet.
Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.
The bio
Favourite book: The Alchemist by Paulo Coelho
Favourite travel destination: Maldives and south of France
Favourite pastime: Family and friends, meditation, discovering new cuisines
Favourite Movie: Joker (2019). I didn’t like it while I was watching it but then afterwards I loved it. I loved the psychology behind it.
Favourite Author: My father for sure
Favourite Artist: Damien Hurst
MATCH INFO
Uefa Champioons League semi-final:
First leg: Liverpool 5 Roma 2
Second leg: Wednesday, May 2, Stadio Olimpico, Rome
TV: BeIN Sports, 10.45pm (UAE)
Napoleon
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LILO & STITCH
Starring: Sydney Elizebeth Agudong, Maia Kealoha, Chris Sanders
Director: Dean Fleischer Camp
Rating: 4.5/5
The biog
Born: Kuwait in 1986
Family: She is the youngest of seven siblings
Time in the UAE: 10 years
Hobbies: audiobooks and fitness: she works out every day, enjoying kickboxing and basketball
How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
Results
Stage 7:
1. Caleb Ewan (AUS) Lotto Soudal - 3:18:29
2. Sam Bennett (IRL) Deceuninck-QuickStep - same time
3. Phil Bauhaus (GER) Bahrain Victorious
4. Michael Morkov (DEN) Deceuninck-QuickStep
5. Cees Bol (NED) Team DSM
General Classification:
1. Tadej Pogacar (SLO) UAE Team Emirates - 24:00:28
2. Adam Yates (GBR) Ineos Grenadiers - 0:00:35
3. Joao Almeida (POR) Deceuninck-QuickStep - 0:01:02
4. Chris Harper (AUS) Jumbo-Visma - 0:01:42
5. Neilson Powless (USA) EF Education-Nippo - 0:01:45
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Our Time Has Come
Alyssa Ayres, Oxford University Press
UAE currency: the story behind the money in your pockets
More from Rashmee Roshan Lall
House-hunting
Top 10 locations for inquiries from US house hunters, according to Rightmove
- Edinburgh, Scotland
- Westminster, London
- Camden, London
- Glasgow, Scotland
- Islington, London
- Kensington and Chelsea, London
- Highlands, Scotland
- Argyll and Bute, Scotland
- Fife, Scotland
- Tower Hamlets, London
MATCH INFO
Iceland 0 England 1 (Sterling pen 90 1)
Man of the match Kari Arnason (Iceland)
North Pole stats
Distance covered: 160km
Temperature: -40°C
Weight of equipment: 45kg
Altitude (metres above sea level): 0
Terrain: Ice rock
South Pole stats
Distance covered: 130km
Temperature: -50°C
Weight of equipment: 50kg
Altitude (metres above sea level): 3,300
Terrain: Flat ice
STAY%2C%20DAUGHTER
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Defence review at a glance
• Increase defence spending to 2.5% of GDP by 2027 but given “turbulent times it may be necessary to go faster”
• Prioritise a shift towards working with AI and autonomous systems
• Invest in the resilience of military space systems.
• Number of active reserves should be increased by 20%
• More F-35 fighter jets required in the next decade
• New “hybrid Navy” with AUKUS submarines and autonomous vessels
Six large-scale objects on show
- Concrete wall and windows from the now demolished Robin Hood Gardens housing estate in Poplar
- The 17th Century Agra Colonnade, from the bathhouse of the fort of Agra in India
- A stagecloth for The Ballet Russes that is 10m high – the largest Picasso in the world
- Frank Lloyd Wright’s 1930s Kaufmann Office
- A full-scale Frankfurt Kitchen designed by Margarete Schütte-Lihotzky, which transformed kitchen design in the 20th century
- Torrijos Palace dome
The five types of long-term residential visas
Obed Suhail of ServiceMarket, an online home services marketplace, outlines the five types of long-term residential visas:
Investors:
A 10-year residency visa can be obtained by investors who invest Dh10 million, out of which 60 per cent should not be in real estate. It can be a public investment through a deposit or in a business. Those who invest Dh5 million or more in property are eligible for a five-year residency visa. The invested amount should be completely owned by the investors, not loaned, and retained for at least three years.
Entrepreneurs:
A five-year multiple entry visa is available to entrepreneurs with a previous project worth Dh0.5m or those with the approval of an accredited business incubator in the UAE.
Specialists
Expats with specialised talents, including doctors, specialists, scientists, inventors, and creative individuals working in the field of culture and art are eligible for a 10-year visa, given that they have a valid employment contract in one of these fields in the country.
Outstanding students:
A five-year visa will be granted to outstanding students who have a grade of 95 per cent or higher in a secondary school, or those who graduate with a GPA of 3.75 from a university.
Retirees:
Expats who are at least 55 years old can obtain a five-year retirement visa if they invest Dh2m in property, have savings of Dh1m or more, or have a monthly income of at least Dh20,000.
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
MISSION: IMPOSSIBLE – FINAL RECKONING
Director: Christopher McQuarrie
Starring: Tom Cruise, Hayley Atwell, Simon Pegg
Rating: 4/5
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
BMW M5 specs
Engine: 4.4-litre twin-turbo V-8 petrol enging with additional electric motor
Power: 727hp
Torque: 1,000Nm
Transmission: 8-speed auto
Fuel consumption: 10.6L/100km
On sale: Now
Price: From Dh650,000
