Author: Joseph Dignam
Senior Portfolio Assistant & Investment Committee Support
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Published: May 2025
April was set to build upon a robust first quarter, buoyed by optimism around global growth, AI advancements, and strong corporate earnings. Instead, markets stumbled, swiftly transitioning from steady progress to sharp volatility.
The catalyst? Policy unpredictability. Investors anticipating a repeat of pro-market policies from a second Trump presidency were abruptly reminded how quickly confidence can evaporate. The President’s “Liberation Day” tariffs applied using a questionable and widely ridiculed methodology, shook markets, and dialled up the uncertainty.
Equities tumbled in response, with US markets declining double digits by the middle of the month. Recession fears resurfaced and defensive sectors gained traction. Tech stocks, particularly the “Magnificent 7”, faced increased pressure amid rising uncertainty. In the end, it was “yippy” bond markets that forced the hand of the Donald, with the US president announcing a 90-day pause to the tariffs that caused so much panic.
Now though, just over a month since “Liberation Day”, it is starting to feel a bit more like “Groundhog Day”, as markets that had fallen, return to pre-2nd April levels. This market behaviour would seem to suggest that investors appear willing to overlook the lingering uncertainties, the reputational damage that has been done, and the structural shifts in asset allocation these events will have triggered. These factors will inevitably have to be accounted for in market valuations at some point in the future.
Despite this turbulence, our diversified strategies provided stability. Our underweight stance in US equities limited exposure to volatility. Positions in gold, which hit new highs, and UK and European equities, benefited portfolios significantly. Europe’s proactive fiscal measures, like Germany’s ambitious €500bn infrastructure and increased defence spending, bolstered regional markets, aligning well with themes like energy security and infrastructure renewal.
Geopolitical risks, including unresolved conflicts in Ukraine and Gaza, continue adding complexity to market forecasts. While markets rebounded partially by the end of the month, uncertainty remains elevated. Whilst these levels of uncertainty provide reason to be cautious, history suggests corrections, even steep ones, can present investment opportunities, though predicting exact outcomes and attempting to time the market is a (an April) fool’s game.
As ever, if you would like to discuss your investments, please do not hesitate to contact us on 01223 233331 or email info@mmwealth.co.uk.
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Disclaimer
Opinions constitute our judgment as of this date and are subject to change without warning. 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 original investment.
The information in this article is not intended as an offer or solicitation to buy or sell securities or any other investment, nor does it constitute a personal recommendation.
The information contained within this blog is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change.
