Market Update - 4th April 2025
April 2025
The sweeping tariffs announced by US President Donald Trump on “Liberation Day” have led to a broad sell-off in global equity markets. These tariffs have been implemented to address the trade deficit between the US and its foreign trading partners. Essentially, this is the difference between the quantity of manufactured goods sold by foreign companies into the US economy versus those sold by US companies into foreign economies.
Donald Trump has used this negotiating policy extensively in the past. His tactic appears to involve announcing disproportionately large tariffs, using them as a negotiating tool, and then settling on a more reasonable level. We would note that the negotiating window is fairly short but expect that tariff rates will decrease over the coming months. Even in this scenario, the probability of a recession has increased globally, as has the likelihood of higher inflation.
It is fair to say that these tariff announcements were significantly worse than expected, and this has been reflected in the market. However, markets tend to overreact in the short term, and as long-term investors we welcome volatility because we can buy good quality assets at cheaper prices.
As a reminder of why we believe in running multi-asset diversified portfolios: In the same week that some US indices are down 5-10%, several of our core bond funds have delivered positive absolute returns. Additionally, some of our longer-duration infrastructure and property investments have also made positive returns.
We are actively monitoring the situation and considering it in the CAM Investment Committee. We will make moves that are appropriate as and when the situation becomes clearer and will do so based on evidence, not news flow.
As always, please contact a member of your usual CAM team if there anything you would like to discuss.
Ross McKnight, CFA
Ross joined CAM in 2024 and is a Senior Investment Analyst. He is involved in multi-asset research and is a member of our asset allocation committee. Ross previously worked as a Research Analyst at WH Ireland and is a CFA Charterholder. One of his biggest career highlights to date was being named in Citywire’s “30 Under 30” to watch. Ross is also a member of the Ireland Funds Great Britain Young Leaders Society, which is a philanthropic network that supports worthy causes in Ireland and around the world. Outside of work, he also enjoys reading and cooking, and is a keen sportsman, playing both cricket and football in his spare time.
