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The Week In Markets – 3rd May – 9th May 2025

“Be fearful when others are greedy, and be greedy when others are fearful,”, are wise words from the great investor Warren Buffet, who announced his retirement at Berkshire Hathaway’s annual shareholders meeting last weekend. A man whom thousands of investors have looked up to over his 70-year investment career will hand the keys over to Vice President Greg Abel at the end of the year.

Warren Buffet has been vocal in opposing the trade war initiated by President Trump, stating, “Trade should not be a weapon”. Canadian Prime Minister Mark Carney shared this view during his meeting with Trump in the Oval Office on Tuesday. Canada is the US’s second largest trading partner after Mexico, with over $760 billion worth of goods flowing between the two countries. Carney mentioned that progress was made during the meeting as he attempted to push back on the tariffs set by the US; however, further talks may be necessary for President Trump to reconsider his position.  

The US Federal Reserve met on Wednesday and held rates steady at 4.5%, just as markets had forecast. Fed Chair Jerome Powell continues to be criticised by Trump for “acting too late”. However, Mr Powell stood firm stating, “the scale, the scope and the persistence of the tariff effects are very, very uncertain”. It was noted that GDP fell in the first quarter as households and businesses attempted to front run tariffs. The term used for the Fed at this point in time is “sidelined”, until it is clear through data points which way the economy will pivot. The data points that the US Fed rely on are backward-looking, which in turn means that as the Fed react to data, they may truly be behind the curve in making cuts.

Donald Trump is certainly a busy man as he works his way through trade negotiations with several countries. He reiterated the need for a Russia/Ukraine peace deal via the Truth Social platform and suggested a 30-day ceasefire, warning both countries would face further sanctions if it wasn’t respected. Ahead of his re-election, he boasted he would end the war in 24 hours, however, over 100 days later there is still no plausible agreement.

There was a lot of talk regarding a breakthrough deal that the US and UK had made, as Prime Minster Kier Starmer labelled Thursday, a “fantastic, historic day”. The US agreed to cut the 25% tariffs on British steel and aluminium down to 0%, a huge boost for the sector. In addition, car export tariffs fell from 27.5% to 10% on a quota of 100,000 British cars, approximately the number the UK exported last year. The UK is the first country to strike an agreement with Trump during the 90-day liberation day pause, however, it seems the US has heavily won this trade deal. British beef farmers received a tariff free quota on 13,000 tonnes of meat but PM Starmer is still pushing against tariffs affecting the pharmaceutical, tech and film/tv sectors.

The Bank of England met on Thursday, cutting rates by 25bps (0.25%) to bring interest rates to 4.25%, in line with market expectations. Of the nine policy committee members, five voted to cut rates by 25bps, two voted for a larger cut of 50bps (0.5%) and two voted for no change. Easing inflation figures were the driving point behind the rate cut and bringing inflation back towards the 2% target is a top priority. We can expect to see a “gradual and cared approach” to the future rate cutting path as the impact of tariffs on data begins to feed in. Over 600,000 homeowners have a tracker mortgage, so the rate cut will have a positive impact on their monthly repayments.

Over in Germany, conservate leader Fredrich Merz was elected Chancellor on Tuesday. It wasn’t as smooth sailing as expected; he initially failed to win the first round of voting with just 310 votes, six shy of an absolute majority. The second round of voting was completed 24 hours later, and he then won 325 votes. There is certainly heightened mistrust between the coalition government of the conservatives and social democrats. Germany is Europe’s largest economy and political stability is crucial for the country to rejuvenate economic growth.

You may have noticed more adverts from Chinese fast fashion retailors Shein and Temu this week as they pivot from the US towards Europe. Both companies experienced extraordinary growth in the US over the last few years, as consumers could purchase clothing as cheap as $12 and accessories as cheap as $5. There has been a significant shift in digital ads spending towards the UK and France and the companies will now attempt to undercut heavyweights such as Zara, GAP and H&M. If you haven’t seen their adverts yet, you will soon!

Rumours of trade negotiations advancing with multiple nations helped support equities this week. Small and mid-cap equities have been under pressure since 2022, lagging their large cap peers, however, we have witnessed steady outperformance over the last month, which continued throughout the week.

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 26th April – 2nd May 2025

This week marks the beginning of May, but the focus in markets has been on the 100-day milestone of President Donald Trump’s tenure. Trump’s short time in office to date has been eventful to say the least and has been described with terms such as “disastrous”, “chaotic” and “Trumpression” – a Trump led depression. With his approval ratings near record lows, he will be under pressure to ensure the next 100 days are viewed as more positive by the US electorate.

Wednesday was the 100-day mark and coincided with the release of the US Q1 GDP figures. The GDP data showed a decline to -0.3%, the first economic contraction in three years, raising fears of a potential recession and confirming a US economic slowdown. This figure was skewed by an oversized number of imports from American businesses and consumers in anticipation of Trump’s tariffs. Elon Musk, who recently stepped back from his role at the Department of Government Efficiency (D.O.G.E), significantly contributed to the economic pullback as government spending fell by 5.1%.

Trump immediately hit back at any suggestion that the blame should stop at his door, stating that the economy is facing a Biden “overhang”. He asserted that once his tariffs take effect and companies begin to move production into the US, the country’s economy will “boom”. We will have to wait and see if Mr Trump’s plan will succeed, but it seems the jury is out for US consumers as sentiment continues to plummet.

Many will remember the disastrous meeting two months ago between President Trump, Vice President JD Vance, and Ukraine President Zelensky, which left little optimism for any potential deal. However, after months of tense negotiations, the US and Ukraine signed an agreement granting the US access to Ukrainian minerals, which ultimately will fund the country’s reconstruction. A peace deal between Ukraine and Russia has yet to be achieved, but a three-day ceasefire will begin on 8th of May to commemorate the 80th anniversary of the Soviet Union’s victory in World War II. 

It was a busy Wednesday, with the release of the US PCE index for March. The US PCE is the Federal Reserve’s preferred measure of inflation, and it was positive to see inflation fall to 2.3% (year-on-year) from the previous month’s figure of 2.7%. On a month-on month basis, the index remained flat. The US Fed will meet next week to discuss the future interest rate path, and on a positive note, Fed Chair Jerome Powell will lead the meeting despite Trump threatening to fire him. However, there is not expected to be any change to rates this time, as the Fed will wait for “clearer signs”, believing the real impact on the economy, inflation and unemployment from tariffs lie ahead.

As we enter the new month, the first Friday always brings us the US non-farm payrolls report. The data remained positive, showing that 177,000 jobs had been added to the economy, following the revised figure of 185,000 for March. The unemployment figure for March remained at 4.2% for the second consecutive month.

UK retail sales have continued to surprise to the upside with March’s figure of 0.4% coming in against expectations of a -0.4% decline. Clothing and outdoor sales led the way, with the Office for National Statistics (ONS) attributing this to good weather. Although this is positive news, there is still concern that the impact of tariffs, along with energy and council tax bills, will affect April’s data and lead to a slowdown in consumption.

We have the first May bank holiday coming this Monday, which often leads to a spike in takeaways. Just Eat and Uber Eats are the preferred choices for UK consumers, but this may change as US delivery agent DoorDash made a $3.6 billion cash buyout offer for Deliveroo. This move will expand DoorDash’s reach into the UK and across European countries such as France and Italy. Deliveroo shares jumped 17% on the day.

Gold dropped to a two-week low on Thursday, a move we can expect as trade tensions begin to ease. While uncertainty remains, there has been progress with US-China tariff negotiations along with continued hope for a Ukraine and Russia resolution which has led investors towards risk assets and away from safe-havens such as gold. This has also led to strong UK equity performance, with the FTSE 100 on track for its 15th consecutive daily increase, its longest winning streak on record.

Equity markets have continued to rebound from recent lows after heightened volatility at the start of April. There is renewed hope that tariff deals will be struck, and the worst-case scenarios will be avoided. Recent inflation data has been better than expected from most developed markets and this may support further rate cuts, which would be a boost to businesses and consumers.

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

Roses and thorns

With the effects of the tariffs announced by Donald Trump in the White House Rose Garden still to play out, Raymond James European Strategist, Jeremy Batstone-Carr, considers some of the potential effects on the global economy.

The Week In Markets – 18th April – 25th April 2025

Equity markets advanced this week on the hopes that trade deals would soon be announced and that the worst may now be behind us. While nothing official has been announced, the US are engaged with many nations and investors expect positive news flow over the coming weeks.

The US equity market has borne the brunt of the tariff sell-off, with investors questioning whether the premium valuation is now justified. Over recent days we have seen the US market lead equities higher, with the beaten-up technology sector one of the bright spots this week. Equities rallied on news from Trump; firstly that he did not intend to sack US Fed Chair Jerome Powell, and then confirmation of talks with China and that a de-escalation on the elevated tariffs was likely.

We are currently in the thick of earnings season and there were key updates from Tesla and Alphabet (Google), two of the “Mag 7” group. After disappointing earnings from Tesla, CEO Musk said he would be taking a step back from Trump’s cost-cutting team (DOGE) and focus more on the business. Alphabet posted very strong results last night and announced a $70bn buyback plan. While tariff news and uncertainty has the ability to impact future earnings, it’s clear that many companies are still performing well and delivering positive earnings growth.

Staying with the US, durable goods orders smashed expectations, rising 9.2% month-on-month for March. While the data is very positive, it is likely there was some front loading in orders prior to the tariff announcements.

There was mixed data from the UK as services PMI came in below expectations and below 50, which indicates a contraction. Services has been a bright spot in the economy, so it is a concern to see this deteriorate. The trend was witnessed across Europe with data from France, Germany, and the wider Eurozone showing services PMI below 50. There was more positive news for the UK with strong retail sales released this morning, rising 0.4% over March. The International Monetary Fund (IMF) downgraded its GDP expectations for 2025 from 1.6% to 1.1%, citing trade wars, borrowing costs, and energy prices as the drivers of the adjustment.

BlackRock CEO, Larry Fink, spoke positively about the UK this week, praising Labour’s pro-growth agenda and stating that UK equities were at a “too deep” discount with BlackRock said to be investing in the undervalued equity market. Capital inflows will be needed to help close the valuation gap and so it is pleasing to see BlackRock’s positive stance on the UK. With investors questioning the US market currently, the UK, along with Europe, could be beneficiaries of any reversal in positioning.

It was a mixed week for gold, which hit new all-time highs at the start of the week, rising above $3,500 an ounce. However, as investors adopted a more risk-on stance, gold suffered, falling over 3% from the highs. The US dollar, typically a safe-haven currency, has traded very differently over recent weeks. The currency has sold off along with equities and has now rallied this week given the more positive tariff rhetoric. Sterling went to 1.34 vs the US Dollar at the start of the week, before falling back. We also saw the Euro make three-year highs vs the US Dollar.

After a very tricky April, it has been pleasing to see some relative calm in markets, with equities continuing to move off recent lows. We expect asset markets to stay volatile as we head into May, but there is potential for good news flow, with both the UK and US central banks meeting as well as the prospect for trade deals to be announced. We continue to search for oversold parts of the market that offer attractive entry points.

Andy Triggs, Head of Investments

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 12th April – 17th April 2025

Many investors will be glad of the shortened work week after a bruising April. Thankfully, this week has been calmer than the previous week, although there has still been a raft of data and policy decisions to digest. We saw UK inflation data released, the European Central Bank cut rates for the third time this year, whilst the Bank of Canada held interest rates steady. In the spirit of Easter, here’s an interesting fact: Cadburys factories produce 1.5 million Creme Eggs daily. If stacked, they would reach 10 times the height of Mount Everest!

We begin in the US with Mr Elon Musk, Head of the Department of Government Efficiency (DOGE), announcing shortcomings in his lofty promises. When Mr Musk first took the job, he claimed he would save the US Government $1 trillion, but this week stated he may only cut government spending by $150 billion, a mere 15% of his goal. A range of government contracts and jobs have been cut already, but they may still go further. Meanwhile, the US Treasury department reported that President Trump has spent $155 billion more than the former president did, in the 87 days since his inauguration. The cost-cutting plans of President Trump and Mr Musk are adding up, or should we say, not adding up.

US Federal Reserve Chair Jerome Powell noted that President Trump’s policies are putting the Fed in “uncharted waters”. The policies are likely to derail economic growth, increase unemployment and cause a reacceleration in inflation – a nightmare scenario for the Fed. They are expected to hold off on any rate decisions at the next meeting and analyse further data points for more clarity.

Boeing, the American airline company, is one of the latest casualties in the trade war between the US and China. China has ordered airlines to halt the purchases of Boeing airplanes and jets, causing shares to fall almost 9% year- to-date. This move comes in retaliation after the US government banned the sale of certain Nvidia chips to China. Nvidia, the posterchild of Artificial Intelligence, stated the ban would lead to a $5.5bn hit to revenues. The share price fell 7% on the news.

US retail sales for March were announced on Wednesday and surprised to the upside as they rose by 1.4% (month-on-month), the most significant rise in over two years. Car dealership sales led the way with a 5.3% rise, likely a rush to purchase as President Trump’s automaker tariffs kicked in at the beginning of April. Markets had anticipated a 1.1% rise in retail spending; however, it is likely we may see a reversal in the coming months as sentiment declines. It’s useful to note that retail sales are not real (adjusted for inflation) therefore it’s possible any increase in data points could be a result of goods prices rising.

UK inflation for March was released yesterday, showing a decline to 2.6% for the second consecutive month. Services inflation, which had crept back up to 5% in previous months fell to 4.7%, a positive for the Bank of England. We mentioned in the last weekly that the effects of “Awful April” with price increases across gas, electricity and water prices, are set to impact future data points. The Bank of England (BoE) has projected inflation to rise to 3.6% in the next print and is likely to remain above 3% for the rest of the year. Despite this, the BoE is expected to reduce interest rates at their next policy meeting in early May.

As expected, the European Central Bank (ECB) cut interest rates for the third time in 2025, bringing the deposit rate to 2.25% and the interest rate to 2.4%. Speaking at the press conference, ECB President Lagarde stated “the economic outlook is clouded with exceptional uncertainty” and “downside risks to economic growth have increased”. These views are likely shared amongst other central banks, CEOs and consumers, which is weighing on sentiment and, if allowed to persist will likely weigh on consumption and investment.

Gold continued its meteoric rise, pushing higher once again this week, including rising over 3% on Wednesday. Investors continue to shun typical safe-haven assets, such as US government bonds and US Dollars, instead flocking to gold.

After the volatility of last week, it was pleasing to see markets calm a little this week. That being said, we did still see 3% moves in US indices intraday this week. We continue to tread a careful path forward, focusing on diversification to help manage risk. This approach has meant drawdowns of portfolios have been much less than that of world equities.

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 5th April – 11th April 2025

It is fair to say this has been an unprecedented week in markets, with tariffs leading to once-in- a-generation moves. On Wednesday, a week after “Liberation Day”, US President Donald Trump announced a surprise 90-day pause in tariffs. This led to a huge relief rally, as we saw US equity markets experience their best trading day since 2008. We will try and unpack what happened in this rollercoaster week below – brace yourself for the regular use of the word “tariffs”!

We wrote about Liberation Day in the last weekly and its impacts on the markets, causing chaos across the globe. We had seen multiple days of US equities selling off and this week there was rising pressure on bond markets and the US Dollar. There really were not many hiding places as Europe, UK and Japan markets also bore the brunt of the pain. With no regard for the markets disarray, Mr Trump began the week stating, “everyone wants to come and make a deal”. He claimed offers had been presented to him that never would have happened but for the moves he made. Ironically, such countries may not have been forced to make such deals if they hadn’t been hit with excessive tariffs.

There were murmurs around the White House on Monday that a 90-day pause could be on the cards; however, these were taken with a pinch of salt. We then saw the big U-turn come on Wednesday as Mr Trump announced that the retaliatory tariffs on countries (excluding China) would be postponed for 90 days. In totality, countries are still dealing with the initial 10% tariffs rate, with the exception of China, but markets reacted positively to the news. By close on Wednesday, the S&P had risen 9.5%, it’s third-best day since 1950. The technology-heavy Nasdaq index rose over 12%, adding $2 trillion in market cap as Nvidia, Apple and Tesla shares all surged over 10%. It looks as though Trump had to backtrack due to pressure from the bond markets. The disorderly sell-off in US Treasuries, if left to continue, would have widespread negative impacts on the US economy, and as such Trump likely bowed to this pressure. Much like Liz Truss found in 2022, you do not mess with the bond market!

While Wednesday’s relief rally was needed, this does not signal the end to the trade war, as Canada and Mexico are still subject to the 25% tariffs rate, and China have been hit the hardest with tariffs increasing to 125%. The Chinese Yuan fell to its weakest level in over 17 years to 7.34 versus the Dollar, causing the Chinese Central Bank to step in. Markets have estimated the impact of the tariffs could lead to China’s exports to the US almost halving in the next few years, a big blow to China’s GDP, which may fall by 1.5%. Mr Trump stated a resolution with China was certainly possible; however, China continue to match Mr Trump tit-for-tat, announcing their own 125% retaliatory tariffs.

The 90-day reprieve is certainly not a time where government officials intend to sit on their hands and do nothing. European Finance ministers have come together to attempt to reach a trade deal with the US. The EU economy is forecasted to grow under 1% this year so the continuation of tariffs poses potential recessionary risks. US tariffs are already in place on the automaker industry and EU officials are ready, to resort to “response mechanisms” if a resolution cannot be found. UK automaker Jaguar Land Rover has initiated a halt in shipments to the US for a month as they consider how to mitigate the costs of tariffs and potential rerouting.

In terms of economic data, it has actually been a positive week. US CPI figures for March unexpectedly fell below market expectations to 2.4%. Consensus forecasts were for a fall to 2.5% amid lower fuel prices. Month-on-month, the inflation rate was -0.1%, again below market forecasts of 0.1%. Core inflation fell below the 3% mark to 2.8% (year-on-year).  Rising airline and hotel prices had been key contributors to the reacceleration in inflation to end last year; however, both sectors fell 5.3% and 3.5% for the month respectively, as we are seeing the turn in consumer discretionary spending driven by weakening consumer sentiment.   

UK GDP figures for February were released this Friday morning, showing the economy grew by 0.5%. Unexpectedly, market forecasts had predicted slight growth of 0.1%, however, there was growth across all sectors, including the manufacturing sector which has been weak of late. There is certainly a lot more for the Labour party to do to continue improving the UK’s economic prospects, as consumers this month face “Awful April” with price increases on energy, water and council tax bills.

We move to news of actual rollercoasters, as Universal Studios announced they will open their first European theme park in England. In a deal set to bring an estimated £50 billion to the UK economy, the theme park will be constructed and open by 2031 in the town of Bedford. Approximately 20,000 jobs will be created during the construction process with a further 8,000 in hospitality once open as 8.5 million visitors are expected within the first year. A win for the Labour party as PM Kier Starmer proudly announced the plan for growth and bringing joy to Britain.

This week will likely go down in history with incredible daily swings in market prices. Trying to trade these markets is fraught with danger, and sometimes the best approach is to do nothing, as difficult as that can be. We’ve already witnessed this week the incredible rallies that can occur on good news, and over the course of the next few months there is the potential for tariff deals to be made, and for central banks to step in and assist.

We’ll finish on a quote from the Democratic political strategist James Carville in 1994 who sums up the power of the bond market:

“I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.”

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

Investment Strategy Quarterly – April 2025

The second Investment Strategy Quarterly of 2025 takes the lid off some of the big themes in global investments at the moment, including the Trump effect across tariffs, deregulation, deportations and more, as well as options for UK market resilience in the face of challenging times. We also take a look at potential strategies for Europe and the case for industrial metals.

Read all this and more in Investment Strategy Quarterly: Markets on the Clock.

The Week In Markets – 29th March – 4th April 2025

A challenging quarter closed on Monday, with the start to the second quarter starting with a bang, as Trump’s “Liberation Day” created extreme volatility in equity markets, leading to the worst day in five years for US equities.

The start of 2025 has proved challenging for US equities, after two years of exceptional performance. It has been the worst quarter relative to global excluding US equities in over twenty years as investors seemingly became nervous about high valuations, increased global uncertainty and a deteriorating growth outlook. It wasn’t just US equities that struggled, with small and mid-cap equities continuing to face selling pressure. UK mid cap stocks underperformed their large cap counterparts by over 10% in the first quarter.

Economic data took a back seat this week with investors focus firmly on “Liberation Day”, where Donald Trump announced a raft of tariffs aimed at reducing the US trade deficit, raising revenues and supporting American produced goods. The tariffs have been far reaching with a minimum 10% tariff on imports coming into the US. The uninhabited Heard & McDonald Islands were even included in the tariff list. While it has been no secret that Trump was keen to implement tariffs, equity markets took the official confirmation of tariffs badly, with trillions of dollars wiped from markets on Thursday. The impact of Trump’s reciprocal tariffs are hard to know at this stage, and there are likely to be retaliatory tariffs on the US announced in the coming days. There is also the prospect that some nations will negotiate deals with the US, while there are even musings that US courts could potentially look to block the imposing of tariffs. Whatever views are on Trump and his administration’s tariff policy, it seems clear they are serious about tariffs and see them as a mechanism to address their budget deficit through raising external revenues, to stimulate their domestic manufacturing base through the re-shoring of production and potentially strengthening foreign currencies, which they view as too cheap. Their approach seems fraught with danger, and the job will be made harder if economic growth is hit too much, something that must be now a possibility as global growth slows due to tariffs and the associated uncertainties this brings. We have already seen business and consumer sentiment deteriorate over Q1 and this is only likely to continue in the coming months.

Global equity markets sold off heavily on Thursday after Trump’s announcements on Wednesday evening . Ironically it was the US equity market that was one of the worst hit, with the main index falling over 4%, and the tech-heavy and small cap indices falling over 5%. There was over $3 trillion wiped from US equity markets. Historically, risk-off markets have normally seen the US Dollar strengthen, however, we saw the US Dollar fall against a range of currencies, including the Euro, Japanese Yen and Sterling. Here in the UK we saw equity markets fall around 2%, with cyclicals bearing much of the pain. The bright spots in equity markets came from sectors such as utilities and consumer staples which are more traditional defensive sectors, with much less cyclical business models. Weakness in equities spilled over into Friday, with Asian and European markets declining further. The move down was accelerated by the news that China has put retaliatory tariffs of 34% on all US imports, starting 10th April. There is an expectation that we will see a similar response from Europe in the coming days.

While equities declined, fixed income markets offered investors some reprieve, with government bonds rallying. Given tariffs are expected to have a negative impact on global growth, investors are now pricing in increased interest rate cuts in developed markets, which has supported government bond prices. Here in the UK, there is now a 90% probability of a rate cut at the next Bank of England meeting in May. Over in the US there is expected to be 3-4 interest rate cuts in 2025 and this has led to the yield on the 10-year government bond falling below 4%.

Commodities have come under pressure driven by deteriorating growth outlooks. Crude oil has fallen around 7% on Thursday and Friday, falling to $62 a barrel. Lower oil prices should ease some inflationary pressures in the system and help businesses and the consumer over coming months through lower energy and petrol prices.

The week ended with key US employment data, the monthly release of US non-farm payrolls. Data was positive, showing 228,000 jobs had been added to the economy, considerably ahead of consensus. While labour data can be considered a lagging indicator, it will please investors to see such resilience.

It has been a very challenging week, with the official confirmation of US tariffs sending equities into a tailspin. We are in the eye of the storm presently and making big investment decisions at moments of stress are fraught with behavioural danger. The world can feel very uncertain, but volatility can create opportunities, particularly for long-term investors. Within portfolios, while being unable to avoid drawdowns, we have been able to limit downsides through a diversified approach in our equity bucket (not simply having a one-way bet on the US equity market and US Dollar), and we have exposure to assets that have risen over recent days, such as government and corporate bonds and infrastructure equities. With investor emotions running high, it is important to take a balanced approach to investing and weigh up both potential risks, but equally opportunities. It’s clear that many assets have become meaningfully cheaper over the last 48 hours, however, there are now new risks to consider, which potentially changes the make up of global trade going forward.

Andy Triggs, Head of Investments

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

The Week In Markets – 22nd March – 28th March 2025

UK Chancellor Rachel Reeves held her Spring statement this Wednesday, announcing significant cuts to the welfare budget. The Labour Party is determined to halt the rise in sickness-related payments and will introduce additional eligibility requirements benefits. The plan for economic growth has not been smooth sailing for the Labour party, and investors are wary of additional tax hikes in the autumn.

UK inflation figures on the same day proved positive, showing a fall in inflation, down from 3% in January to 2.8% in February. Core inflation (excludes energy and fuel prices) also fell from 3.7% to 3.5%. This fall may be short lived as businesses brace for the increase in costs due to rising employer national insurance contributions and households facing a rise in council tax and energy bills. The Bank of England paused rate changes at their last meeting on Thursday, and the anticipated future rise in inflation will certainly reduce their appetite to cut rates in the upcoming meetings.

UK retail sales data released this morning was positive, surprising markets which predicted a fall due to weakening consumer confidence. Month-on-month, retail sales rose 1% in February, following the revised figure of 1.4% in January. Online retail sales rose 3.3% along with rises in the clothing and household goods sectors. Again, there is a cloud of gloom over such positive numbers as they are expected to be short lived with imminent price increases which create a headwind for consumers.  

Across Europe, France and Spain inflation figures for March deviated from market expectations, signalling to the European Central Bank (ECB) that further rate cuts may be needed. France inflation remained low at 0.8% for the second consecutive month and Spain inflation fell to 2.3%, marking the first decline in six months. The ECB has cut rates six consecutive times, bringing interest rates down to 2.65% in an attempt to address slowing economic growth. The next ECB meeting is 17th April, and several data points will be considered ahead of that meeting. Market forecasts are for two further rate cuts for the year.

2nd  April is a key date for the world as it marks “Liberation Day”, when Trumps tariffs are (finally) set to begin. This week, the announcement of the 25% tariffs on overseas automakers sent markets into disarray. Automaker share prices were hit hard, with Toyota shares falling -2.5% for the week and India’s Tata Motors down -4.5% over the same period. Trump doubled down on his position, stating any reciprocal taxes would be met with further tariffs. US equity markets continued to unwind as the S&P 500 fell -1.1% and the Nasdaq fell -2% on the day. The uncertainty surrounding Trump’s policies continues to create uncertainty, which is now feeding through to business and consumer confidence.

The geopolitical uncertainty provided further support for gold, which off the back of recent all-time highs, advanced further during the week. Other commodities, such as silver and copper, have also seen strong returns recently.

At a portfolio level we continue to be well diversified, spreading risk across a wide range of geographies and asset classes, which has helped us navigate a tricky first quarter.

Nathan Amaning, Investment Analyst

Risk warning:  With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

 

 

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