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So far, the stock market has been putting investors in a good mood this year. However, the global situation offers little reason for excessive optimism. “One shouldn’t succumb to crash fears. But it may be time to at least realise some of the recent gains,” comments Carsten Gerlinger, Managing Director and Head of Asset Management at Moventum AM.

Were these the first signs of weakness? After reaching 18 all-time highs and gaining around 14 per cent since the beginning of the year, the DAX took a significant step back in the middle of last week. The Stoxx Europe 600 is also faltering after rising nine per cent since early January. For some time now, one could have questioned where the optimism in European stock markets is coming from, especially as they have significantly outperformed the US market so far in 2025. “Given the strong rally since the start of the year, it’s wise to maintain a healthy degree of scepticism,” says Gerlinger. “It seems that negative scenarios, which are not entirely unlikely, are currently being largely ignored.”

With the announcement of tariffs of around 25 per cent on car imports, among other goods, US President Donald Trump has now set an initial marker. Whether this plan will actually be implemented remains uncertain. So far, however, investors appear to be taking this uncertainty in stride. A more widely priced-in factor seems to be the stabilisation of the European economy. It is also possible that investors are already considering potential positive scenarios, such as the reconstruction of Ukraine, which could benefit European companies.

“Stock market history shows that in situations like these, sometimes all it takes is one seemingly insignificant piece of news to cause sentiment to shift quickly and significantly. Investors should keep this in mind to avoid being caught off guard,” says Gerlinger. The potential consequences of escalating trade conflicts are, after all, relatively predictable: higher costs for consumers, leading to reduced spending, lower sales for exporters to the US, and possibly shrinking profit margins. None of these would be positive developments for the stock market.

A crash in the equity markets does not necessarily have to occur in the coming weeks or months, Gerlinger notes. However, those who have benefited from the strong market performance in recent weeks or from the exceptionally strong stock market year of 2024 may want to consider taking at least some of their profits. “If I am already planning to free up some liquidity for new investments, now could be a good time,” says Gerlinger. In general, he advises maintaining a long-term perspective. After all, frantic market timing—trying to anticipate an imminent crash and then jumping back in quickly—often ends in failure.