Market Update: Navigating Volatility Amid Tariff Tensions and Policy Shifts
April proved to be a turbulent month for global markets, with political headlines, particularly from the United States, taking center-stage. The most impactful news came from President Trump’s “Liberation Day” announcements on trade tariffs. Markets had been bracing for tough talk, but the scale of the proposed tariffs, especially a steep 145% rate on some Chinese goods, came as a shock. The result was an immediate selloff in global equities, particularly in the US.
However, some calm was restored mid-month. Trump announced a temporary 90 day pause and rolled back tariffs on a range of electronic products. The aggressive tone around China also softened slightly. These moves helped equity markets begin to recover, but most regions - including the US, UK, and Emerging Markets - were unable to fully claw back earlier losses. Interestingly, Europe, Japan, and Asia Pacific (excluding Japan) managed to end the month in positive territory.
Towards month-end, another layer of uncertainty was added when Trump publicly criticised the Federal Reserve Chair, Jerome Powell. This raised questions about the independence of the central bank, a cornerstone of financial stability. The bond market reacted sharply, prompting Trump to clarify that he wasn’t seeking Powell’s removal.
Key Market Moves (in GBP terms):
- Equities: Down -2.4% overall
- Fixed Income (Bonds): Up +1.0%
- Commodities: Down -8%, with oil and gas prices plunging over 21%
- Gold: Gained +5%, reinforcing its role as a safe haven (up 25% year-to-date)
- Currency: The US dollar weakened, while the British pound strengthened over 3%
Regional Equity Highlights:
- US: Down -3.6% for April; down -10% year-to-date
- Emerging Markets: Down -2%, weighed by a 7% drop in Chinese markets
- UK: Held relatively firm, down just -0.3% for the month; still up 4% year-to-date
- Europe: Gained +1.4% for the month; up 9% for the year
- Japan: Rose +2%, trimming its year-to-date loss to -0.7%
Across global markets, growth stocks outperformed value stocks, with the energy sector pulling value stocks lower due to falling oil prices. Mid-sized companies generally outperformed, except in the US and Japan.
In fixed income, government bonds led the gains, especially UK government bonds, as investors sought safer assets amid political uncertainty.
Economic Outlook:
The global economy is now showing signs of strain from the ongoing tariff tensions. Business confidence has taken a hit, especially in the US where consumer sentiment dropped to levels not seen since the COVID-19 pandemic. There’s concern that this could slow down investment and potentially raise unemployment.
In Europe and the UK, key service sector indicators have dipped below the threshold that signals growth, while Japan stood out with an improvement. Despite early signs of a possible inflation uptick due to tariffs, underlying inflation in the US actually cooled in March to 2.4%.
Markets are now pricing in interest rate cuts as a potential response to weakening growth; four cuts are expected in the US, and three each in the UK and Europe.
That said, the US market has rallied 9.3% from the low in April, offering a sign that investors are cautiously regaining confidence despite the broader uncertainties.
In Summary:
April reminded investors that markets are still very sensitive to political headlines and policy shifts. While some areas showed resilience, others, particularly US equities and commodities, faced headwinds. Amid this uncertainty, diversification and a steady hand remain essential. As you can see from the recovery this month, drops are never permanent in the market, and the level of volatility we have seen in recent months is likely to continue.
As ever, this article is intended to inform you of market movements and factors effecting the portfolio. We have already factored this in to our long term assumptions in your financial plans, however should you have any questions, please contact your adviser.
About
Aled Phillips
: Aled is a Fellow of the PFS, a Chartered Financial Planner, and a Chartered Fellow of the CISI.
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The contents of this article do not constitute financial advice in any way; if you have any concerns about your finances you should talk to your financial adviser. The value of your investments can go down as well as up.
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