April 2025 was a month defined by dramatic swings in global financial markets, driven largely by geopolitical developments and policy uncertainty emanating from the United States. 

The reintroduction of aggressive trade tariffs by President Trump – dubbed as “Liberation Day” tariffs – sent shockwaves through equity and bond markets alike, which we have discussed throughout April in our updates during the volatile time.

The uncertainty surrounding the duration and scope of these policies left many investors cautious, and the S&P 500 experienced its fifth-worst two-day decline since World War II.  

Market sentiment has been fragile following this heightened volatility as a result of policy unpredictability caused by the Liberation Day tariffs, leading to a subsequent rollercoaster ride for investors throughout April.

However, we soon saw markets rebound impressively towards the end of the month, with the S&P 500 experiencing its third-largest one-day gain shortly after the initial market falls, as Trump moved to pause some of the more extreme tariffs. This saw the month end with the S&P 500 only modestly down.

The softening of the tariff agenda as a whole, with a softer stance towards China in particular, coupled with public support of an independent Federal Reserve by President Trump, helped fuel a modest recovery in equities.  At the same time, we saw a decline in gold prices – traditionally seen as the go-to safe haven of investors – suggesting investor confidence in the equity market was improving.  

Nevertheless, we should not mistake short-term market recovery for longer-term economic recovery at this time. Business investment has remained subdued, with persistent geopolitical and wider global economic uncertainty being regularly covered by the media.

Looking ahead, markets remain on edge as the July expiration of the tariff pause looms. While short-term rallies have provided a welcome relief in the interim, the underlying economic signals – such as slowing growth, cautious corporate guidance, and geopolitical friction – suggest that volatility may persist in the months to come.  

Maintaining a long-term perspective, noting that the best and worst trading days often cluster together during these periods of volatility, is key. As part of our Central Investment Proposition, we look to anticipate such volatility within the investment cycle. By using diversification, this can help to cushion the impact of market fluctuations by ensuring that investments are not overly concentrated in any single sector.

Should you have any questions about your investments at this time, please do not hesitate to get in touch with a MacDonald Partnership Independent Financial Adviser on 01463 242 242. 

Author: Marcus Rayer, Independent Financial Adviser, Integrity365

Published: 16th May 2025