Week ending 11th April 2025.

This volatile week has underscored the value of maintaining a long-term focus. Markets endured a dramatic sequence of events—plunging early in the week as trade tensions flared, only to soar midweek after a surprise policy pivot from the White House. This highlights the importance of staying focused on long-term investment objectives rather than reacting to short-term market noise.

Trump’s so-called reciprocal tariffs came into effect earlier this week, causing a broad sell-off in global markets. Then came Wednesday, and with it, Donald Trump’s dramatic reversal, dropping tariffs to a blanket 10% for 90 days to allow for trade negotiations with most of the countries and territories targeted. Critically, China was not included in the pause, but even a partial reprieve was enough to ignite a powerful rally. That single day transformed the week. The S&P 500 jumped 9.5%, marking its ninth-largest daily percentage gain in history, while the Nasdaq Composite surged over 12%, recording its second-best session ever.

By Friday, the S&P 500 had gained 5.7%, the Nasdaq was up 7.3%, and the Dow Jones rose 5%, rounding out one of the most dramatic weekly turnarounds since the financial crisis.

Markets in Europe and Asia staged significant recoveries following the U.S. pause announcement but ultimately closed the week lower as the tit-for-tat tariffs between the U.S. and China continued. President Trump pressed ahead with aggressive tariff hikes on Chinese imports, raising duties to 145% by week’s end, while Beijing retaliated with 125% levies on U.S. goods, describing Donald Trump’s brinkmanship as “a joke.”

We have consistently advised investors to avoid reacting impulsively to sharp market pullbacks, and this week provided a clear illustration of why. Despite the unsettling headlines, patient investors were rewarded as the markets swiftly rebounded reaffirming our belief that Trump’s trade tactics are merely short-term noise.

Economic data wise, U.S. inflation cooled more than expected in March, with headline CPI dropping to 2.4% from 2.8%, and core inflation easing as well — supporting the view that price pressures are cooling. While full impact of the proposed tariffs may not yet be visible, the data, along with a strong labour market and resilient spending, suggests the U.S. economy remains solid.

In the UK, the FTSE 100 rose on Friday after the economy unexpectedly grew 0.5% in February, driven by strong services and a surge in exports to the U.S. ahead of new tariffs. While the data lifted markets, expectations for faster rate cuts from the Bank of England persist, with analysts cautioning that growth may falter amid trade and geopolitical pressures.

Just when investors thought the week had delivered its final twist, the White House dropped another surprise—this time after markets had closed on Friday. On Saturday, the Trump administration announced that it would exempt smartphones, computers, semiconductors, and other key electronics from the newly imposed China tariffs. The exemption, backdated to April 5, is expected to ease pressure on the tech sector and help prevent a sharp rise in consumer device prices.

This news provides a significant reprieve for the “Magnificent Seven”—Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla. By shielding key products and supply chains from tariffs, the policy alleviates margin pressure, supports earnings, and helps stabilise sentiment in the tech sector. Importantly, this move benefits not only the tech giants but also offers reassurance to broader equity markets, given the outsized impact these companies have on index performance. We may see additional exemptions in the coming days or weeks.

While some volatility is likely as trade talks continue, the market rebound was both welcomed and expected. As we’ve emphasised, dips are typically short-lived within a long-term investing strategy. A globally diversified portfolio remains the best way to manage uncertainty and pursue growth. Remember successful investing is about time in the market—not trying to time the market.

Coming up next week, we have China’s balance of trade, GDP, and industrial production data, alongside UK retail sales, unemployment rate, and inflation data. Additionally, Eurozone industrial production, U.S. retail sales, and industrial production are expected. The European Central Bank is widely anticipated to lower interest rates by another 0.25% on April 17, as policymakers navigate a deteriorating Eurozone growth outlook amid unpredictable global trade tensions.

Kate Mimnagh, Portfolio Economist