We’re now over a third of the way through 2025, and while the weather might be warming up, investment markets have had a much bumpier ride. So, this feels like a good moment to step back, look at what moved markets in April, and consider what might be worth keeping an eye on for the rest of the year.
What’s been going on?
First things first, let’s be 100% transparent. Markets will almost certainly wobble again, whether that happens next week, next month, or next year, no one can say for sure. One of the things we can be most confident about when it comes to investing is that periods of volatility are part of the journey.
Over the last month or so, the S&P 500 (the largest US market index) has risen by 11.62%, and the FTSE 100 (the largest UK market index) is up by 11.39%. That’s a significant turnaround, especially considering that, only a few weeks ago, we emailed to acknowledge just how volatile (and unsettling) market performance was looking at the time.
What caused the swings?
As I’m sure you’ve seen on the news (and from our emails), much of the volatility stemmed from the US government’s announcement of new tariffs on a broad range of goods and services from different countries. The subsequent rebound was caused by, you guessed it, an announcement that the tariffs wouldn’t be applied across the board, as originally stated. Cue a sharp rebound in market confidence and prices.
This is a perfect example of how unpredictable markets can be and why active investing (somebody trying to predict market movements) is so difficult. To have navigated this perfectly, you’d have needed inside knowledge of the US administration’s every move (and even then, who knows?).
In addition to tariff announcements, many companies reported their earnings for the previous financial year, with results generally exceeding expectations. Firms such as JP Morgan, Coca-Cola, and McDonald’s posted strong performances, contributing to a rise in their share prices.
So, what’s next?
Heads up, you could stop reading here. Arguably, none of the following information is actually helpful to investors. Here’s why:
- No one really knows what’s going to drive markets in the short term, or in which direction they’ll move. At best, these are guesses.
- Even if markets do move as a result of these predictions, so long as your financial plans haven’t changed, then the best course of action will be to do precisely nothing.
What we do expect over the next weeks and months is significant news and scrutiny on the path that global interest rates take. Central banks adjust interest rates to manage inflation and economic activity. Keeping rates too high can suppress growth, while lowering them too quickly can fuel rising inflation. Both companies and governments will be closely monitoring upcoming interest rate decisions.
We also expect continued news and headlines about global tariffs and trade agreements. The UK is the first country to have sealed a new trading agreement with the US this week, which has provided much more clarity for specific sectors like car manufacturers and the steel industry. Countries across the globe will be a little jittery until they seal their own.
The bottom line?
Markets are always moving, sometimes in ways that can feel dramatic. But zoom out, and these movements are part of a bigger, long-term picture. Staying focused on your long-term plan (and not getting thrown off course by every twist and turn) is usually the best thing you can do.
And of course, if you’d like to talk through what any of this means for you, we’re always here to help. Moments like these are when having a financial expert and a solid plan can make all the difference.
