ABN AMRO MeesPierson foresees economic slowdown, reduces equity position

• ABN AMRO MeesPierson reduces equity weighting from slightly overweight to neutral

• Increased uncertainty; economic outlook less favourable due to American trade policy

• Private bank sees recent rally as a good opportunity to shed some risk

Increased uncertainty, higher inflation in the US

ABN AMRO MeesPierson has decided to reduce its equity position from slightly overweight to neutral. The private bank sees that uncertainty has increased on the back of US import tariffs and has become less positive about the macroeconomic situation in recent months. All in all, reason enough to be a little more cautious on equities, the bank believes.

“The economic outlook has become gloomier since the start of the year,” says Thomas Pellegrom, Investment Strategist at ABN AMRO MeesPierson. “At the beginning of 2025, the outlook was still good, with a strong US economy, and economic recovery in Europe and China. But since US President Donald Trump announced higher import tariffs than economists had expected, the likelihood of recession has grown and US inflation expectations have risen.”

No recession but a sharp slowdown

The tariffs remain high even now that the first trade agreements have been signed, ABN AMRO MeesPierson notes. What’s more, uncertainty surrounding the trade war has undermined the confidence of consumers and businesses and could lead them to postpone or cut back spending. Even so, the bank does not expect a recession. Pellegrom: “Growth expectations for the US have taken a significant hit, but they did start out high. We have revised our expectations downwards to 1.4% for 2025. So no recession, but a sharp slowdown. Growth is expected to be lower in Europe (0.6% in 2025) than in the US, but we expect the positive effects of investments in infrastructure and defence to become visible there from next year. Given the uncertainty around the tariffs, we want to take a step back now, having already become more cautious earlier this year by slightly reducing our positions in the US and the IT sector.”

Rapid recovery creates opportunity to shed some risk

ABN AMRO MeesPierson saw financial markets recover quickly despite the uncertainty and volatility. The combination of a less rosy outlook and higher equity markets is a reason for the private bank to reduce its risk exposure. Pellegrom: “There is still a lot of uncertainty, and even if more trade deals are reached, structural damage has been done. We believe it would be naïve to assume market volatility has subsided completely now, and we don’t think the recent rally fully priced in the risks. So we are acting on the recovery as an opportunity to reduce risk within our portfolio at a favourable price by slightly lowering our equity weighting.”