Global Markets Overview is published and updated every month. This includes what has happened in markets, our macroeconomic outlook and price updates on assets such as government bonds, credit and equities.
In this Global Markets Overview
Asset price moves between April 3 and 17 have been dominated by what President Trump labelled “Liberation Day”. On April 2, President Trump announced a “reciprocal” tariff policy on imports to the U.S. from almost all countries, with tariff levels much higher than expectations. Since then, part of these ‘reciprocal’ tariffs have been postponed for 90 days (April 9), tariffs between the U.S. and China have risen materially, some sectors (e.g., consumer electronics) have been temporarily exempted by the U.S., and new sector investigations have been started (e.g., semiconductors and pharmaceuticals). Our latest April GMO video dives into this further:
The top highlights from our latest Global Market Overview.
The details of the policies, responses by countries, and ongoing uncertainty have been hugely impactful for financial markets in early April. For example, at one point, the S&P 500 had fallen over 20% from its February peak – the definition of a bear market – before recovering partially. However, for most investors what matters most are the asset price outcomes over the next three-to-five years and this requires looking more widely than the recent headlines on trade and tariffs.
- Yes, the effects of tariffs are to slow economic growth, through weaker consumption and investment, and increase the price level, over the next three quarters
- However, over the medium-term, while trade and tariff policies matter, other policy areas – fiscal, monetary, and regulation – are also hugely important, e.g., U.S. imports make up only 14% of US GDP
- Other key policy priorities of the Trump administration are:
- Reducing government spending and supporting higher private sector investment
- Corporate and household tax cuts
- Improving U.S. fiscal sustainability for economic and national security reasons
- Big deregulatory shifts across all major U.S. industries
- These other policies, if executed well, can increase U.S. productivity, incomes, and wealth, and lower inflation. They won't be impactful in the next few weeks or months. However, they will be impactful later this year, and in the next few years especially
A balanced, well-diversified portfolio, with selective downside risk hedges, and macro and security-specific active management, remains the best way to manage the high uncertainties, tariff-related market volatility, and rising US recession risks over the short-term. It also provides the foundation to benefit from the likelihood of pro-growth U.S. policies as they likely play out in future years at cheaper equity valuations.
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David is the Global Head of Asset Research at WTW, responsible for economic and capital market research. He also is a member of the Investment Assumptions Committee, who help guide investment policy globally.
