Q1 Update - Q2 Outlook

Published: 08/04/2025 By Oliver O'Brien

Q1 Market Update  
2025 began strong with global equities up 4.2%. Europe took the crown as best performing developed market with 8.2% returns, due to an improved economic outlook and prospects of increased defence spending.
 
We also saw a reversal of US stock dominance. Chinese, European and UK stocks surged in February whereas the US fell. This was one of the biggest switches from US to Europe value switches in almost 10 years.
 
This was prompted by ongoing concerns about the increased push towards tariffs and a potential all-out trade war. US growth prospects and consumer sentiment soured while increased defence spending in the UK & Europe spurred further stock gains. Chinese stocks were further buffed up by improved economic data and the release of DeepSeek AI.  

This non-US confidence didn’t last though and in March, all major regions sold off, with the most severe losses found in the big US tech firms. Trump’s “Liberation Day” then began to loom and investors held their breath.
 
Q2 Outlook & Holding the course  
The announcement of significantly higher than expected tariffs has shaken markets and left them in turmoil.  While expected, their high level was not and if there’s one thing markets dislike: it’s surprising and negative news. This has led to rational market behaviour turning into panic, leading to asset classes outside of equity falling such as gold and government bonds.  

This ever-increasing rise in uncertainty is not something investors are enjoying and the current aggressive tariff tactics with continual deadlines for negotiating is creating a high-risk market environment.
 
Holding the course in a storm 
While things may seem dire, we should remind ourselves that there are still positives, such as:

• The fundamentals for global growth haven’t changed   

• It is a man-made crisis with clear leveraging options for world leaders 

• Geo-political issues continue to provide non-US demand – such as from European and Chinese fiscal expansion.   

When the dust settles and policy direction becomes clearer, there is potential for a sharp recovery; but equally continued uncertainty could lead to further sharp losses.  Only by holding for the long term can investors ride out this short-term volatility and we strongly encourage investors to not make any rash decisions.

If you are concerned about the effect of recent events on your investments please do no hesitate to get in touch - call us on 020 8661 7878 or email advice@turpinba.co.uk