Written by Cormac Nevin
Last week was a strong one for global equity and fixed income markets as investors continued to allocate to US tech stocks in the face of ongoing uncertainty regarding tariff policy and the second order implications of said policy. The MSCI All Country World Index of global equities was up +3.4% in GBP while the NASDAQ 100 Index of US tech stocks was up +6.4% in USD terms. However, the ongoing weakness in the US Dollar translated the weekly gains in the NASDAQ to a +5.8% return for GBP based investors. This continued the story of the year to date, which has seen a sustained selling in the US Dollar, particularly since the announcement of Trump’s tariff policies on the 2nd April despite last week’s recovery in equity markets. In fixed income markets, we saw the riskiest areas of the market as measured by the Bloomberg Global High Yield Corporate Index rebound strongly, returning +1.2% in GBP hedged terms for the week.
A range of views have been circulating regarding the recovery in observed market sentiment. Some point to an easing in trade tension rhetoric (despite scant evidence of actual progress on substantial trade deals), strength in corporate earnings with decent (backward-looking) earnings posted by Alphabet/ Google and also continued buying from retail investors. We remain mindful that much of the data observed currently is rather stale and that the likely second-order implications of the trade disruption are only going to appear with a lag. Much of the global financial system is hard-wired to buy outsized volumes of US equities via unthinking “passive” investment strategies – and it may take some time for foreign authorities to unwind these flows with the aim of keeping capital at home instead.
Whatever the outcome for the US economy from the uncertain trade policy, we continue to focus on attractive investment opportunities across the globe which are not concentrated on any one geography. This approach has strongly shown its benefits throughout this year, and we feel it is reasonable to expect that to continue.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
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All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 28th April 2025.
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