Weekly Market Recap

14 April 2025

Global Investment Solutions

EMEA & LATAM

Introduction

The past week has been marked by significant volatility across global markets, driven by a combination of geopolitical tensions, trade policy developments, and economic data releases. Investors navigated a complex landscape as they reacted to the latest round of tariffs, central bank policy updates, and economic indicators. This report provides a comprehensive overview of the key events and trends that shaped market performance for the week ending on Friday, 11 April 2025.

Initial Summary

Global markets experienced a rollercoaster ride last week, with major indices reflecting the ongoing uncertainty and volatility. The US stock market saw sharp fluctuations, influenced by the Trump administration's tariff announcements and subsequent 90-day pause for most countries, excluding China. European markets were impacted by central bank interventions and mixed economic data, while the UK showed resilience amid market volatility. In Asia, Japan and China faced their own set of challenges, with currency movements and trade tensions playing a significant role. Other regions, including Latin America, the Middle East, and Africa, also experienced varied market reactions based on local and global factors.

The Economic and Political Backdrop

The US

US stocks experienced a volatile week, closing higher overall. The week began with equities sharply lower due to negative sentiment ahead of the Trump administration's latest round of tariffs. However, President Donald Trump announced a 90-day pause on the higher reciprocal tariffs for most countries, effective immediately, to allow time for negotiations. This news sent stocks soaring, with the Nasdaq Composite gaining over 12% and logging its second-best day on record.

Despite the pause, China was excluded, leading to several increases in tariffs on Chinese goods throughout the week, reaching up to 145%. China responded with increases to levies on US imports, up to 125%. The escalating trade war dampened some of the week's positive sentiment, causing stocks to give back some gains on Thursday. By week's end, the S&P 500 Index was up 5.7%, the Nasdaq Composite closed 7.3% higher, and the Russell 2000 Index posted 1.8% gains.

The Federal Reserve released minutes from its March policy meeting, highlighting increased downside risks to employment and economic growth, and upside risks to inflation due to higher tariffs. The Bureau of Labor Statistics reported that core consumer prices rose 0.1% in March, the lowest reading in nine months, with a year-over-year increase of 2.8%. The University of Michigan's Index of Consumer Sentiment showed a decline for the fourth straight month, with year-ahead inflation expectations surging to 6.7%, the highest since 1981.

Europe

Trump's tariff announcements prompted central banks in the eurozone to increase their monitoring of financial institutions and markets. German industrial production contracted by 1.3% in February, while Italy's industrial output fell 0.9%. Italy's economy grew 0.7% in 2024, below the official forecast, leading to a reduced GDP growth projection of 0.6% for 2025.

The UK

The Bank of England (BoE) requested information from lenders about market liquidity and potential issues faced by hedge funds and other clients. The BoE also delayed auctions of long-dated gilts in response to market volatility. The UK economy expanded by 0.5% in February, with GDP rising 1.4% year-over-year, exceeding consensus estimates.

Japan

Concerns about US recessionary conditions and a sell-off in US Treasuries led investors to seek safer assets like the yen, which strengthened to JPY 143.5 against the US dollar. The 10-year Japanese government bond yield rose to 1.30%, with signs of stock market stabilization supporting the Bank of Japan's monetary policy normalization. BoJ Governor Kazuo Ueda emphasized the need for global cooperation to address tariff impacts.

China

China raised tariffs on US goods to 125% from 84%, starting 12 April, following the US's increase to 145%. Beijing criticized the US's latest tariff hike and appeared to rule out further increases on its part.

Other Regions

Latin America: Markets in Latin America were influenced by global trade tensions, with mixed performances across the region. Brazil's Bovespa Index saw gains due to strong corporate earnings, while Mexico's IPC Index faced pressure from concerns over US trade policies.

Middle East: In the Middle East, geopolitical tensions and fluctuating oil prices impacted market sentiment. The Saudi Stock Exchange (Tadawul) experienced volatility, while the Dubai Financial Market (DFM) showed resilience with modest gains.

Africa: African markets were relatively stable, with South Africa's JSE All Share Index benefiting from positive economic data and improved investor confidence. However, ongoing political uncertainties in Nigeria weighed on its stock market performance.

Conclusion

The past week highlighted the interconnected nature of global markets, where geopolitical developments, trade policies, and economic data collectively influence investor sentiment and market performance. As we move forward, it will be crucial to monitor these factors closely, as they will continue to shape the investment landscape. Staying informed and adaptable will be key for navigating the complexities of the current market environment.

This comprehensive recap provides a detailed overview of the key economic and political developments affecting global markets over the past week. If you need further insights or specific data, feel free to ask!