The market news may be giving you whiplash, but Tom Francis, our Head of Digital Advice, breaks it all down.

What’s happening in the markets?

The tech sector saw some turbulence at the end of January with the arrival of Chinese artificial intelligence startup, DeepSeek, on the scene. The popularity of their latest model, DeepSeek R1, which is said to match ChatGPT in capabilities and performance (but in a much more low-cost way – and we know that in the tech sector innovation can cause significant disruption!) spooked investors and the markets, causing them to take a tumble. Nvidia, a US technology company that designs and manufactures hardware and software, lost an unprecedented $589 billion in market value overnight. Handy fact for a pub quiz – this is the biggest one-day stock drop in in history to date.

US President Donald Trump has long discussed tariffs. But recent announcements of tariffs followed by reversals, have caused both confusion and market volatility. 

First of all, what is a tariff? Simply put, a tariff is a tax imposed by a government on imported or exported goods. Trump is placing tariffs on goods imported from a select number of countries. Only physical goods are subject to tariffs, not services.

These are part of an aggressive trade policy in a bid Trump says will boost US manufacturing, protect jobs, crack down on the drug fentanyl entering the country and illegal immigration, all while growing the economy.  

The UK has largely avoided threats of tariffs from the US so far. Whether this will continue remains to be seen. 

In February, the Bank of England dropped its interest rate to 4.5%. Those with a mortgage may jump for joy, while anyone with a savings account might feel a bit wistful as banks reduce their interest rates on savings accounts. The BOE also revised its 2025 growth forecast down to 0.75%. 

What does this mean for your investments?

Depending on the risk-level of your investments, you may have seen some volatility in the value of your portfolio over the past month, especially if they contain US and global tech stocks. 

In terms of whether we need to be concerned about US tariffs, as the UK hasn’t been targeted so far, these shouldn’t affect the UK economy directly, but will impact a globally diversified investment portfolio (like Octopus Money’s). 

The Bank of England’s decision to lower interest rates was mainly based on data suggesting that the UK job market is slowing slightly, and that higher-than-target inflation is caused by higher energy prices, which should ease over time.

Inflation hits everyone hard, but especially lower earners. The next review by the Bank of England is in March and as part of that they will consider how fast prices are rising, how the UK economy is doing (whether it’s growing or contracting) and how many people are in work. 

As always, we recommend investing for the long term, and it’s one of the most powerful tools to combat the impact of inflation on our savings. So if you’re investing already, there’s no reason to stop or change your strategy unless your goals and priorities have changed. 

Just like every year which has come before, the rest of 2025 certainly looks like it’ll be an interesting ride.

Remember, with investing your capital is at risk. Your investments may go down as well as up, and you may get back less than the amount you invested.