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Despite a lot of political noise and further threats around tariffs, equity markets delivered strong returns in July. After several months of the dollar weakening versus sterling (and other major currencies), the US currency rebounded over the month, delivering additional returns to sterling investors. Global equities posted a sterling return of 5.7%, mainly driven by the US market which posted a healthy 6.9% return. All major equity returns posted positive returns, with the UK market +3.9%.

Markets demonstrated their ability to climb the “wall of worry” despite complex geopolitical tensions, trade policy developments and monetary policy uncertainty. They were buoyed by a successful US earnings season, with 80% of US companies beating consensus estimates. Major US banks did particularly well as, according to Morgan Stanley CEO, Ted Pick, corporate clients and boardrooms now “appear more accepting of ongoing uncertainty”. While on the trade policy front there were some major developments, with Trump’s administration agreeing deals with Japan, Europe and Vietnam, and a deal in principle with China, reduced fears of an escalating trade war. Trade uncertainty has driven volatility since the initial announcement on 2nd April. The average US tariff rate has risen to 18% from the 2% level on 1st April but markets responded positively with policy clarity, particularly after the passage of the “One Big Beautiful Bill Act” (OBBBA), which supported risk sentiment. It was a busy month from a legislative perspective with Trump also signing the cryptocurrency related GENUIS Act and three executive orders on AI as part of the US’s AI Action Plan.

The UK equity market delivered healthy returns, with the large cap section of the market (FTSE 100) leading the charge. A significant number of the index has global exposure so the strength of the dollar over the month contributed to performance.

While markets breathed a sigh of relief over tariff policy clarity, there were certain areas that were hit quite hard. Copper saw an intra-month fall over -20%, as Trump imposed a 50% tariff on certain copper products. As soon as July finished, we got to see the final (for now at least) tariff rates. Brazil, Canada and Switzerland were struck with particularly aggressive rates. Latin America’s largest country was given a 50% rate for purely political reasons as Trump retaliated over the charges facing his ally, the former Brazilian President Jair Bolsonaro.

With the market in “risk-on” mode and equities delivering positive returns, it was no surprise to see bond markets were generally flat over the month, with the exception being emerging market bonds finished up 5% – in keeping with the “risk-on” narrative.

Returns across asset classes have been positive so far this year and it’s reassuring to see diversification demonstrating its benefit to investors. However, looking forward there are a few things to note. Valuations in the US remain elevated and income growth is skewered in favour of a small number of ginormous firms.

There are no guarantees tariff dramas won’t return.  All while potential macroeconomic volatility and geopolitical uncertainty are very much issues to be mindful of and underscore the need for effective diversification.

As we move into what’s looking like a really hot summer and take stock of the year so far, there’s been plenty of interesting developments.

Despite concerns around President Trump’s trade policies and escalating conflicts with Iran, most major asset classes delivered positive returns over the quarter. While this is encouraging, we have seen significant market volatility along the way.

Starting in the US, Trump’s policies had a meaningful impact on markets given the scale and unpredictability of his actions in recent months. Most equity markets took a sharp downward tumble after Trump’s “Liberation Day” tariff announcements at the start of April. A week later, this led Trump to delay some tariffs and reduce others, and US equities recovered to finish the quarter up 5.7%, with a 2.8% increase in June.

So far, regional diversification has really benefitted portfolios in 2025. In the last quarter, we saw strong gains from Europe (6.5%), the UK (5.2%), Japan (4.7%), Asia (+7.8%) and Emerging Markets (5.8%).

Year to date, most regions outside of the US have generated gains, while the US has lagged, particularly in sterling terms as the US dollar has depreciated against the pound. We believe there are several factors driving this shift. First, the valuations of many international companies had been trading at more attractive levels than their US counterparts. In Europe, we’re seeing a move away from austerity to fiscal stimulus which should help accelerate economic growth. In Emerging Markets, we have higher growth rates and an expanding consumer base which is attractive relative to other developed markets. As a result, we continue to see good opportunities outside the US and want to maintain exposure to fund managers that can take advantage of these investments.

Bonds generally delivered strong returns over the period, led by Global and UK corporates delivering 4.3% and 27% respectively. UK Gilts also rose the quarter by 1.8%. Politically, June was a bit of a mixed bag here in the UK, as we saw separate trade deals with the US and Gulf States announced, a £500mn investment in quantum computing and Rachel Reeves’ welfare cuts being countered by rebels throwing her budgetary plans up the air. Conversely, Global Bonds fell -2.2% due mainly to the impact of falling US Treasuries. In the US, rising fiscal concerns led to a downgrade of the US sovereign credit rating by Moody’s and the selling of long-dated bonds pushed yields higher.

It is encouraging to see markets recover significantly since the April lows, however, there remains considerable uncertainty around Trump’s policies and the impact they will have over time. In June alone, we saw Trump very publicly fallout with Elon Musk, deploy the National Guard in Los Angeles, and go back on his campaign trail promises by turning interventionist, and bombing Iranian nuclear sites. While these challenging times of geo-political uncertainty continue, diversification remains key.

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.