Author: Spencer Maynard Wealth Management

April certainly wasn’t short on market volatility as investors grappled with Trump’s erratic trade policies. It now feels like a lifetime ago since Trump announced his “reciprocal” tariffs during April 2nd’s “liberation day”. They triggered sharp market declines and a major spike in volatility across asset classes. Market sentiment improved after Trump announced he would pause tariffs for 90-days (initially except for China). Markets began to recover much of their losses, but despite this, economic data weakened over the period with the US economy contracting 0.3% in Q1 and US consumer confidence fell to its lowest level since the Covid outbreak.

Nearly every region posted a negative equity return in April. The US was the worst performing region declining by -2.6%. This had a big knock-on effect on global equities (the US represents roughly 70% of the global market) and dragged down the global index by -1.4%. It’s worth noting that these returns were exacerbated by US dollar weakness as the pound appreciated 7.5% against the dollar. As noted already this year, the UK has proven to be more resilient in the equity-market downturn, and only fell -0.1% in April. And on a more positive note, Europe was an outlier with the European equity markets posting a small gain of 0.3% for the month. The European region is benefitting from several factors including fresh economic stimulus, attractive relative valuations and a more benign inflation outlook.

Bond markets certainly weren’t immune to all the volatility, but they did provide a decent counter to falling stock markets and generated gains over the period. The market’s initial reaction has been that tariffs will impact global growth, providing central banks with the ability to cut interest rates. As a results markets are pricing in further interest rate cuts by the Fed, BoE and ECB. We saw the first cut by the BoE last week, and as market interest rates fall, the price of those interest baring bonds such as Gilts and Treasuries rise.

Precious metals outperformed significantly. Gold prices rallied to an all-time high of $3,500 per ounce on 22nd April. Aside from precious metals, most other industrial-linked commodities fell sharply in April, dragging the three month returns into negative territory. Energy commodities fell by double digits in April alone amid rising fears and a decision from OPEC members to increase oil supplies.

Things have already moved on rapidly in the first two weeks of May. In just the last week we’ve seen the UK and US reach an “Economic Prosperity Deal” and the US and China slash tariffs and pause their trade war.

With Congress needed to approve any major trade deal, there will be plenty more negotiations between the UK and US in the months ahead, but the major agreements so far include a significant cut to car tariffs, the scrapping of the steel and aluminium tariff and the UK’s removal of its 20% tariff on US beef.

Negotiations between the US and China will obviously continue during the current 90-day pause, but the tariff climbdown has been very well received by markets and comes well ahead of previous market expectations.

In March 2025, global financial markets were unstable due to economic uncertainty and changing tariff policies, which made investors anxious. The Trump administration’s bold trade plans, especially new tariffs introduced in April, caused significant market changes. This summary looks back at what happened in March and how things have developed by April 2025, including the latest market responses and economic effects.

Equity markets in March were rattled by the looming threat of the Trump administration’s tariff plans, which crystallized in April. The announcement of these measures in early March, coupled with President Trump’s refusal to dismiss recession risks, triggered a sharp sell-off, illustrated by the Nasdaq’s 4% single-day plunge—the steepest since September 2022. By month end, all regional equity markets had posted losses, with the U.S. declining over 8.0%, dragging the global equity index down 7.1%. The UK, relatively insulated from tariff threats, limited its drop to 2.4% at the end of March, while emerging markets cushioned their fall at 2.3%, thanks to a weakening US dollar.

In April the tariff rollout has deepened the equity decline. The S&P 500 fell over 17% from its February peak with tech-heavy indices like the Nasdaq suffering even steeper declines. Markets have continued to gyrate, with $5 trillion wiped off U.S. equity valuations since the tariff announcement, reflecting fears of a global trade war and recessionary concerns. Investors are hopeful of a negotiation-driven reprieve but are grappling with the potential for sustained trade barriers.

In March, bond markets emerged as a counterweight to equity turmoil. The expectation that tariffs might slow global growth fuelled speculation of central bank rate cuts, overshadowing inflationary concerns for the time being. This flight to safety reflected a market focused on growth risks rather than price pressures, offering a reprieve from equity losses.

After the end of-March, however, the bond market narrative has evolved and remains fluid, as inflationary fears tied to tariffs are creeping back. The Federal Reserve, under Chair Jerome Powell, has hinted at a delicate balancing act. Higher inflation from trade disruptions could limit rate-cut prospects, challenging bonds’ safe-haven status. Investors are now reassessing whether bonds can sustain their appeal if stagflation (lower growth and higher inflation) risks materialise, adding a layer of complexity absent in March.

Gold shone brightly in March, climbing 6.7% to breach $3,100 per ounce, driven by safe-haven demand amid tariff uncertainty. Central banks and institutions continued their trend of purchasing which has been the case for the last couple of years. Broader commodities rose a modest 1.2%, with natural gas surging, oil stagnating, and metals facing trade-related headwinds.

At the start of April, the tariff escalation has intensified safe-haven inflows, while oil remains volatile amid sanctions and trade fears. This widening divergence—gold soaring as equities and other commodities falter—highlights a market increasingly polarised by Trump’s trade war and their potential implications.

The one thing with the Trump administration is that it is hard to predict, and narratives can change quite quickly. Right now, the market is in a “shoot first, ask questions later” mode. Inflation and growth fears are certainly front and central but these concerns could just as easily filter away

With such as uncertain backdrop we think diversification remains critical and a calm approach is essential. The tariff shock has morphed March’s uncertainty into a tangible economic challenge, testing investors’ resilience as they navigate this landscape, but we have had many instances like this in the past.

The shortest month of the year certainly didn’t feel brief as markets lurched in response from one geo-political drama to another. US markets took the brunt of the damage as Trump’s proposed (and delayed for now) tariffs on Mexico and Canada led to inflation fears. Consumer confidence numbers didn’t help matters, and lingering fears over the sustainability of earnings from big US tech stocks saw the NASDAQ suffer its biggest monthly decline in ten months.

As the month progressed, Trump’s willingness to cut support for Ukraine in its war against Russia became more apparent, forcing many European leaders to start reappraising defence spending. Friedrich Merz, fresh from his expected victory in the German election, announced plans to lift the constitutional limit on borrowing (aka the ‘debt brake’) that’s been in place since 2009, and in turn greatly increase spending on defence and infrastructure. It was a good month for defence spending across the continent – delivering returns of 9.3%, with major firms like BAE and Rheinmetall benefiting.

Here in the UK, large banks, defence and big pharma lifted the FTSE 100 higher. Sterling strengthened over the period, and despite the UK budget having been received poorly and consensus that the UK government has failed to hit the ground running, the UK equity market, like other non-US equities, delivered positive returns above 5%. In doing so, the FTSE 100 hit all-time highs.

In China, good results from Alibaba and the ongoing ramifications of DeepSeek’s AI reveal in January, continued the recent tech-stock fuelled equities revival. Conversely, DeepSeek raising question marks about US tech’s ability to dominate the AI market was still hampering US tech equities. Its innovative product seems to be capable of delivering the same results by using far less computational power than it’s US rivals, and at a fraction of the cost. Emerging markets also benefited from a weakening dollar.

The Japanese equity market declined and finished February with a negative return of -2.1%. The Nikkei fell due to weak performance from large cap tech and exporters. Developments in the US also had a knock-on effect, leading to a sell-off of AI-related stocks. The interest rates on government bonds climbed following remarks from Bank of Japan (BoJ) officials, hinting at a potential shift towards stricter monetary policies that could increase the cost of borrowing. Additionally, the value of the Japanese yen rose compared to the US dollar, which added more strain on companies that sell goods abroad, causing their stock prices to feel the pressure.

Bond markets were generally positive as fears of a slowdown in the US resulted in gains across fixed income markets. Global bonds proved to be a good diversifier against equity losses. Strong performance and positive returns in fixed income served as an important reminder that investors need to remain diversified to help protect portfolios against any further volatility that may lie ahead.

Commodities were pulled back as fears of a global slowdown grew. Meanwhile gold continued to act as a go-to asset class for investors seeking safety in these uncertain times.

Looking forward, we expect the year to be interesting and challenging as no one quite knows exactly what to expect from Trump, and markets do not like uncertainty.

However, this will not be the only story for markets and as always it is likely that select opportunities will present themselves.

The new year has started strongly across financial markets, with equities, bonds, and alternative investments all delivering positive returns. A weakening sterling provided an additional boost to international holdings for UK investors, adding to the strong start.

European equities led the way, gaining over 8% in January, despite ongoing political uncertainty in France and Germany and persistently weak economic data from Germany, the Eurozone’s largest economy. Investor optimism appears to be driven by the potential for the European Central Bank (ECB) to cut interest rates. They proceeded with a rate cut at the end of the month to 2.75%, and the market is factoring in further cuts to 1.75% by year-end.  European markets have also been buoyant since Trump’s return as there seems a greater possibility to the end of the conflict in Ukraine.

In the United States, the return of Donald Trump to the White House has added a new layer of complexity to the economic outlook. His administration’s early policy proposals, including tax cuts, tariffs, and immigration restrictions, have already influenced market sentiment. Inflation in the US unexpectedly rose to 3% in January, up from 2.9% in December, driven by rising food and energy prices. The market is now starting to question the Federal Reserve’s ability to cut interest rates going forward. We have seen a strengthening the dollar and government bond yields have increased.

At the same time, the rapid emergence of DeepSeek (a large language model from China) has sent ripples through the technology sector. This new Artificial Intelligence (AI) model appears capable of delivering responses on par with established American models, such as OpenAI’s ChatGPT and Meta’s Llama, but at a fraction of the cost. By optimising computational efficiency, DeepSeek has bypassed the need for the vast processing power and financial resources that have traditionally dominated the sector. While there are still questions about its underlying costs and data sourcing, the development suggests a shift in the competitive landscape, one that could have lasting implications for the AI industry and the broader technology market.

Despite a UK budget that was poorly received and early signs of a government struggling to gain momentum, UK equities mirrored global trends, posting gains of over 5%. The FTSE 100 reached record highs, supported by a sector rotation into traditional areas such as energy and mining, which are a large part of the FTSE 100 index, following DeepSeek’s disruptive impact on the technology sector.

Bond markets experienced positive returns in January but with increased volatility. Concerns over Trump’s policy agenda, particularly inflationary pressures linked to tax cuts and tariffs, led to a rise in US bond yields. However, despite these fluctuations, bonds still managed to deliver modest gains. Meanwhile, commodities performed strongly, returning over 5% for the month. Gold and industrial metals rallied on renewed tariff concerns, while oil prices climbed due to continued sanctions on Russian exports and increased demand driven by colder weather.

Economic indicators globally have presented a mixed picture. China’s consumer price index rose by 0.5% year-on-year in January, marking its fastest pace in five months, largely due to increased spending during the Lunar New Year holiday. However, the manufacturing sector continued to struggle, with producer prices remaining weak. In the US, job creation slowed, with employers adding 143,000 jobs in January, falling short of expectations. Despite this, the unemployment rate declined to 4%, and wage growth remained strong, with average hourly earnings increasing by 0.5% from December and 4.1% year-on-year. These factors could add to inflationary pressures in the coming months.

Looking ahead, the economic environment looks uncertain, shaped by political developments, monetary policy shifts, and technological disruptions. Trump’s policies are likely to add further concerns, while advances in artificial intelligence and their potential impact on corporate profitability will continue to be a key theme for investors.

The final month of 2024 offered a mixed bag for global markets, capping off a year that was largely favourable for risk assets but ended on a more cautious note. December’s economic pulse reflected a challenging environment, as markets navigated the implications of a shifting policy landscape, persistent geopolitical tensions, and regional economic divergences. Performance across asset classes was mixed, with equities delivering modest gains in some regions but generally underwhelming results overall. Alternatives and bonds faced broad declines, while currency movements highlighted the strength of the dollar against its major counterparts.

The U.S. equity market continued to shine, posting a 10.7% return over the fourth quarter and cementing its position as the top-performing region for the year. December’s performance was bolstered by strong GDP growth and investor confidence in the continuation of Trump’s 2.0 economic agenda. Policies centred on tax cuts and deregulation have invigorated various sectors, with financials and small-cap stocks starting to join the growth alongside the “Magnificent Seven” mega-cap tech giants that dominated earlier the year.

The strengthening U.S. dollar added an additional tailwind for sterling-based investors, appreciating by 6.6% against the pound during the quarter. This currency dynamic amplified returns and underscored the relative strength of the U.S. economy compared to other developed markets.

In stark contrast, Europe ended the quarter as the worst-performing region, with equities declining by 4.4%. The continent’s manufacturing sector faced significant headwinds, including rising costs, weak export demand, and intensifying competition from China. Political instability in key economies such as France and Germany further weighed on sentiment, exacerbating the poor performance of European equities.

UK equities posted a marginal decline of 0.7% for the quarter but managed a respectable near10% gain for the year. December’s performance was subdued as the UK autumn budget introduced higher than expected tax hikes, dampening investor enthusiasm. However, attractive valuations and robust merger and acquisition activity provided a silver lining, hinting at potential upside in the medium term. The first positive net inflows into UK equities in years, observed in November, suggest a gradual shift in investor sentiment toward the region.

Asian and emerging markets closed the year on a weak note, with equities declining in quarter four. Persistent macroeconomic challenges in China—including soft economic data, falling property prices, and concerns over debt sustainability—cast a shadow over the region. Emerging markets also struggled with the ripple effects of U.S.-China trade tensions and a stronger dollar, which discouraged capital flows into these economies. Japanese equities were a notable exception, delivering modest gains for the quarter. The ongoing benefits of corporate reforms and optimism about the end of deflation supported the market, offering a glimmer of hope in an otherwise challenging environment for the region.

Throughout most of 2024, declining inflation enabled central banks to cut interest rates, providing a supportive backdrop for fixed-income assets. However, December saw cracks in this narrative as concerns emerged about the inflationary potential of Trump’s fiscal policies, particularly the reintroduction of tariffs. This shift in sentiment led to weakness across interest rate-sensitive assets, including bonds, infrastructure, and real estate.

Gold, a perennial safe haven, rebounded strongly with a 5.9% gain for the quarter, reaching all-time highs in October before stabilising. The metal’s performance was underpinned by geopolitical uncertainty and continued central bank purchases. In contrast, other commodities faced headwinds as slowing global growth tempered demand.

As 2024 drew to a close, markets exhibited a cautious optimism tempered by emerging risks. The U.S. continued to lead the global recovery, buoyed by robust economic growth and market-friendly policies. However, the divergence in regional performance highlighted the fragility of the global economy, with Europe and emerging markets lagging behind. Looking ahead, the interplay between fiscal stimulus, monetary policy, and geopolitical developments will shape the narrative for 2025. While December may not have ended the year with fireworks, it provided a fitting conclusion to a complex and dynamic year for global markets.