What’s happened so far in 2025?
US equities fell in the first quarter of 2025 with Information Technology and Consumer Discretionary sectors posting the steepest declines. China’s Deepseek caused investors to reassess growth expectations around AI and the US leadership in the field and as the AI theme has powered stock market returns in recent years, this news put pressure on some of the largest stocks of the index.
We can’t ignore that Trade tariffs were another significant theme in the first half of 2025. On 2nd April or “Liberation Day”, the Trump administration announced a broader swathe of tariffs in addition to those already announced on Mexico and Canada and certain goods. The markets reacted with fear and further losses were seen across a broad spectrum of equities. Gold became a temporary safe haven amid the market volatility. No sooner had the Trump administration announced the new global tariff regime that was due to start one week later, a 90-day pause was announced for all but China which saw duties increase to 125%. On 12th May 2025 a 90-day tariff reduction between the US and China was announced which saw US markets surge with many of the losses from April recouped.
The Eurozone market did well with investors looking to European equities in the wake of the Deepseek sell off. Some of these early gains were wound back following the global tariff announcements with the automobile sector being the first to feel the effects of investor concern but following the announcement of the 90 days pause, markets regained some lost ground.
In the UK, large cap companies saw growth in the first quarter although sentiment towards UK Small and Mid sized companies remained cautious due to the economic outlook. The pledge from the UK’s largest pension funds in May to invest at least 10% of their assets in unlisted markets by 2030 is expected to help bolster the AIM market and smaller company sector.
In mid May, the UK and EU announced a new agreement which included fewer restrictions on British food exports, improving energy security and a defence and security pact that could pave the way for British companies to take part in a €150 billion programme to rearm Europe. Although this announcement, along with a new trade deal with the US and India will unlikely lead to an immediate economic boost, it could lift business confidence and attract more investment.
Michelle Gardner FPFS, on behalf of the Fairey Associates Investment Committee
Chartered Financial Planner
Senior Paraplanner
Risk Warnings
US equities fell in the first quarter of 2025 with Information Technology and Consumer Discretionary sectors posting the steepest declines. China’s Deepseek caused investors to reassess growth expectations around AI and the US leadership in the field and as the AI theme has powered stock market returns in recent years, this news put pressure on some of the largest stocks of the index.
We can’t ignore that Trade tariffs were another significant theme in the first half of 2025. On 2nd April or “Liberation Day”, the Trump administration announced a broader swathe of tariffs in addition to those already announced on Mexico and Canada and certain goods. The markets reacted with fear and further losses were seen across a broad spectrum of equities. Gold became a temporary safe haven amid the market volatility. No sooner had the Trump administration announced the new global tariff regime that was due to start one week later, a 90-day pause was announced for all but China which saw duties increase to 125%. On 12th May 2025 a 90-day tariff reduction between the US and China was announced which saw US markets surge with many of the losses from April recouped.
The Eurozone market did well with investors looking to European equities in the wake of the Deepseek sell off. Some of these early gains were wound back following the global tariff announcements with the automobile sector being the first to feel the effects of investor concern but following the announcement of the 90 days pause, markets regained some lost ground.
In the UK, large cap companies saw growth in the first quarter although sentiment towards UK Small and Mid sized companies remained cautious due to the economic outlook. The pledge from the UK’s largest pension funds in May to invest at least 10% of their assets in unlisted markets by 2030 is expected to help bolster the AIM market and smaller company sector.
In mid May, the UK and EU announced a new agreement which included fewer restrictions on British food exports, improving energy security and a defence and security pact that could pave the way for British companies to take part in a €150 billion programme to rearm Europe. Although this announcement, along with a new trade deal with the US and India will unlikely lead to an immediate economic boost, it could lift business confidence and attract more investment.
Michelle Gardner FPFS, on behalf of the Fairey Associates Investment Committee
Chartered Financial Planner
Senior Paraplanner
Risk Warnings
- The value of an investment and the income from it could go down as well as up.
- All investing is subject to risk, including the possible loss of the money you invest.
- Past performance is not a reliable indicator of future results.
- Diversification does not ensure a profit or protect against a loss.
- Please remember that all investments involve some risk. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income
- This communication is for general information only and is not intended to be individual advice. It represents our understanding of law and HM Revenue & Customs practice as at 9th June 2025. You are recommended to seek competent professional advice before taking any action.
