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No-one expected the advent of Trump 2.0 to be dull, but few could have predicted the chaos that has been inflicted on investors during his first 100 days in office. This came to a head at the beginning of April when the tariff announcements on Trump’s “liberation day” provided an unprecedented level of self-inflicted market turbulence. The tariff increases announced being significantly higher than markets had anticipated, with the imposition of a standard 10% tariff and a wide range of more stringent measures announced.

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The first week of April saw an indiscriminate sell off and heavy falls across global investment markets, with few places to hide. To put this turbulence into context, the Vix index of US stockmarket volatility (often dubbed the fear index) reached levels only previously witnessed at the peak of the Global financial crisis and the outbreak of Covid.  

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However, unlike Margaret Thatcher – famed as the lady not for turning, Trump was forced to make a U-turn on his tariff policies on 9th April, with a sharp sell-off in the US Government bond market the likely catalyst. He paused tariff implementation for 90 days (8th July being the date to look out for) to help calm markets, which duly surged in the following days.

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As if his tariff policies were not enough, Trump alarmed investors further during the month with comments threatening the future independence of the Federal Reserve, but once again he made a complete reversal later in the month - saying he had no intention of removing Governor Jay Powell.

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The total unpredictability of Trump’s policies has already started to weigh on the US economy which shrank by an annualised 0.3% in the first quarter of 2025 (the first negative reading since 2022) although this was attributed to huge imports made before Liberation Day, whilst US consumer sentiment fell by 32% in April to levels not seen since the recession of 1990.

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Meanwhile, the UK and Europe had been showing some positive economic signs in the run up to Liberation Day. The UK economy grew 0.5% in February after January’s fall and Europe’s GDP gained 0.4% in the first quarter (although the IMF cut global growth forecasts due to US protectionism).The  UK’s inflation reading in March was 2.6% and maybe now the Bank of England will be happy to cut rates to support growth.  Rates in the Euro area were cut again in April for the 7th time since June 2024. European base rates are now 2.25%. For once the European Central Bank is being dynamic. The Fed is the outlier with August pencilled in for a potential first cut of 2025 though some are now suggesting no cuts at all this year.

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Moving eastwards and China is clearly President Trump’s main target. Does he want a trade deal with them? Does Beijing want one? Initial signs aren’t good. Beijing reciprocated US tariffs and went a stage further by weakening the currency. That is a good sign for the likes of UK and Europe as it will cheapen imports. China’s economy has been showing some positive signs though with retail sales rising 4% year on year in January and February and annualised growth of 5.4% in Q1.

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April provided another lesson that in times of extreme volatility sitting on your hands is often the best strategy. Those who panicked and sold out early in April would have missed the strong recovery that ensued. Somewhat bizarrely, by the end of April, equity and bond markets were in a similar position to where they started the month, despite the violent swings and a huge increase in uncertainty that has been caused by the tariff policies which if implemented will prove to be a watershed for global trade.

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Going forward, investors will be hoping that Trump dials back on his radical trade war and provides more predictability which should help stabilise consumer and business confidence. But, if he continues to pursue his aggressive tariff policies, it appears likely the US economy is heading for recession and we can expect to see a very volatile backdrop for global investment markets over the coming months.

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Market Watch

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After the Trump induced chaos of the first few days of April it was quite a surprise to see stockmarkets recover their poise with the MSCI World Index finishing the month just 0.4% lower and many major markets in the range of minus 1% to plus 1% for the month. The exception being Chinese related markets with the strongest tariffs inflicting the most damage. The Hang Seng fell 4.8% in April but is still the best performing major market in 2025 up just over 10%. Japan probably had the best month with both Topix edging up – maybe the unveiling of $27 billion of buybacks last month helped alongside undemanding valuations. Quite surprisingly Nasdaq also gained over the month with strong reporting from Microsoft and Meta at the end of the month.

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Last month was equally volatile for bond markets, but like equities they regained their poise by the end of the month. The US ten-year treasury finished April yielding 4.16% slightly down from the 4.21% rate offered a month ago (although it came close to 4.5% before Trumps’ climbdown). The UK ten-year gilt finished the month offering 4.44% down from 4.68% at the start of April despite news that the UK borrowed £14 billion more than expected in the last financial year. Germany’s ten-year bund had a similar picture to the UK after tightening fairly sharply to finish April offering 2.44%.

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On the currency front the big story was the sharp fall in the value of the US dollar, still the world’s reserve currency but Liberation Day has had wider impacts than just equities. The greenback fell 3.3% against sterling last month whilst the pound fell just over 1.6% against both Euro and Yen.

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In the commodity markets gold continued the stellar run of 2025 with economic uncertainty and market turmoil fuelling demand. An ounce of gold started April costing $3158 and finished at $3319 having broken through $3500. Oil was a big loser with a barrel of Brent falling $11 to finish at $63.12 on concerns of a slowing global economy.

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N.b. the fund sectors exclude money market funds, markets are in local currency, and investment trusts exclude VCTs.

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Important Information

This document is produced by Fairview Investing Ltd, an independent research consultancy. The content is for information purposes only and does not constitute financial advice. The commentary or research provided do not constitute a personal recommendation to deal. Any statements, opinions, forecasts, and figures are made by Fairview Investing (unless otherwise stated). They are considered to be reliable at the time of writing but may be subject to change.

Fairview Investing accepts no legal responsibility or liability for the content of this material. The contents of the document are not to be re-produced or circulated without the express permission of Fairview Investing Ltd. Fairview are independent investment consultants sitting on the Investment Committee of EXE Capital Management.

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