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Our monthly market update.
The quarter was characterised by a rise in geopolitical tensions due to the threat of US tariffs and further hostilities in the Middle East, the latter of which de-escalated relatively quickly. The initial recession fears around the “Liberation Day” tariff announcements in the US eased as a more conciliatory approach was ultimately taken. Despite President Trump unveiling higher than anticipated broad-based tariffs, these were generally suspended for 90 days to allow for trade negotiations to take place.
Markets recovered during May, as consumer sentiment improved and trade tensions eased. Progress was made in US trade negotiations with both the European Union (EU) and China, as temporary delays to the proposed tariffs were announced. Following this announcement, the fear that tariffs could trigger a global recession abated
After months of speculation, April finally saw the announcement of “Liberation Day” tariffs by President Trump, which were broader and more punitive than had been expected.
Q1 2025 was volatile. Volatility has stemmed from elevated investor uncertainty regarding US trade policy. This has subsequently dampened global growth expectations, but in particular this has impacted the US and Europe the most.
Growing uncertainty about the impact of the US Administration’s policy agenda weighed on investor sentiment, which was further exacerbated by renewed concerns about slowing global growth.
2025 started positively for investors, with both equities and bonds broadly delivering positive returns. However, there was a departure from the 2024 trend, with European markets outperforming the US. President Trump’s ‘America First’ policy agenda, was supportive for US equities, but the emergence of Chinese artificial intelligence (AI) company DeepSeek, called into question the US technology sector’s ability to deliver against the lofty expectations of the market.
Over Q4 2024, markets were largely driven by the US election, which ultimately saw US shares advance following Donald’s Trump’s victory. However, other regional markets came under pressure amid worries over the threat of trade tariffs.