April 2025 Market Summary

Introduction

April proved to be a significant month for global markets, following President Donald Trump’s announcement of “Liberation Day” tariffs on 2 April 2025 and subsequent 90-day suspension just one week later. While the full implications of these proposed measures remain uncertain and negotiations with affected countries continue, the volatility experienced throughout the month reinforces the importance of a well-diversified, long-term investment strategy.

Here is how some of the top indices around the world performed in the year leading up to 1 May 2025:
FTSE100: 4.70%
S&P 500: 4.70%
Stoxx 600: 4.84%
Nikkei 225: -4.67%

As of 1 May, the major global indices showed a positive return for investors over the previous year, despite some very strong volatility headwinds experienced in April. At the start of the month, within the space of just one week, President Trump announced and subsequently paused tariffs on 168 countries globally. Notably, the President decided to raise the proposed tariffs to 124.1% on Chinese exports into the US. The initial announcements of tariffs on 2 April caused a downward spiral market, but the subsequent pause to tariffs on 9 April was enough to give investors further confidence that they could secure trade deals. The S&P 500 was therefore able to recover some of the ground it had lost.

The UK

The UK’s services sector, which makes up 80% of the UK economy, contracted in April for the first time since October 2023. According to the S&P Global Services Purchasing Managers Index (PMI), a fall to 49.0 from 52.5 in March indicated a decline in business activity. Factors contributing to this downturn included weakened business sentiment, falling new orders and employment, and rising input costs partly driven by tax increases and a rise in the minimum wage. Additionally, global financial tensions and US President Trump’s new tariffs significantly impacted export demand, with overseas orders declining at their sharpest rate since February 2021.

In a month dominated by tariff news, it was also reported at the end of April that the US economy shrank 0.3% in the first quarter, as policy uncertainty began weighing on businesses. This is down from 2.4% GDP growth in Q4 of 2024. This was due to imports, which increased by 41.3% compared to the previous quarter as a reaction to the uncertainty around tariffs. Analysts expect the figure to reverse if tariffs become more certain going forward. The US has also been able to add a further 177,000 jobs to the market in April, beating initial expectations and keeping the US unemployment rate steady at 4.2%.

Canada 

The Liberal party in Canada, led by former Governor of the Bank of England Mark Carney, won the Canadian Federal Election, narrowly missing out on a majority of seats. In a campaign that was dominated by Trump’s announcement of tariffs and controversial statements towards Canada, and following the step-down of Justin Trudeau as Prime Minister in March, the Liberal Party was considered to be out of the race. However, Carney’s firm stance on Canada’s independence and economic revival was enough to resonate with voters and lead them to victory.

This is an example of why investments are a long-term strategy, and trying to time or play the market over the short term may not be the most suitable. A typical investment horizon is for 5 years plus and so looking at a very close snapshot such as shown in Figure 1, can be misleading and lead to incorrect conclusions being drawn about the state of the market.

If we now look at a much longer time horizon, as shown in Figure 2, we can see how the same index has performed since 2014 up until the announcement of the extension to the implementation. Figure 2 also shows important and newsworthy events that were happening during the period and so provides some context as to how the markets were performing during market events. Resilience plays a big part in how markets react to global trade disruptions. Over four years ago, the Ever Given container ship blocked the Suez Canal – a major event during the COVID-19 pandemic. Companies quickly adapted, re-routing through alternative ports to maintain trade.

This event caused global container costs to rise from $1,700 to over $10,000. In 2023, attacks in the canal reduced trade by 80%, where before 30% of the world’s shipping was reliant on this route. As a result, by 2025, container costs have dropped to around $2,000. This sharp recovery shows how the ability to adjust and stay flexible under pressure can shape outcomes, and reinforces the importance of resilience when considering the long-term impact of global events on markets.

Europe

The Eurozone started 2025 strong, achieving 0.4% GDP growth in the first quarter against 0.2% expected growth. Europe has seen limited growth in the past couple of years due to high inflation and lack of business confidence, but this positive note suggests things are beginning to change. Amidst this, the ECB cut interest rates in March and are expected to do so again in May as countries such as Germany and Italy moved to 2.1% inflation, just shy of the 2% target.

Sources:

BBC News. (2025) UK manufacturing PMI: Production contracts at faster pace as new orders decline. Available at: https://www.bbc.co.uk/news/articles/cpwz9kl12l1o (Accessed: 6 May 2025).

Google Finance. (2025) Global market index performance. Available at: https://www.google.com/finance (Accessed: 1 May 2025).

Reuters. (2025) Euro zone economy expands faster than forecast but faces trade war hit. Available at: https://www.reuters.com (Accessed: 6 May 2025).

Sky News. (2025) Mark Carney’s Liberal Party wins Canada election, according to Canadian broadcasters.
Available at: https://news.sky.com/story/markcarneys-liberal-party-wins-canada-electionaccording-to-canadian-broadcasters-13357890 (Accessed: 6 May 2025).

Peterson Institute for International Economics (PIIE). (2019) US–China trade war tariffs: A date-by-date chart. Available at: https://www.piie.com/research/piie-charts/2019/us-china-trade-war-tariffs-date-chart (Accessed: 6 May 2025).