Macroeconomic EventsIn the US, February’s nonfarm payrolls rose by 151,000, missing expectations, while the unemployment rate edged higher to 4.1%. Average hourly earnings met forecasts, though annual growth of 4.0% undershot estimates. The February jobs report was released amid uncertainty from President Donald Trump’s administration and restructuring efforts led by Elon Musk’s Department of Government Efficiency (DOGE), which contributed to a 10,000 reduction in federal employment. The Federal Reserve kept interest rates steady at 4.25%-4.5% following its March meeting and signaled that further rate cuts remain possible in 2025, though policymakers are turning slightly more hawkish. Inflation pressures eased, with February CPI falling to 2.8% year-over-year, while core CPI dropped to 3.1%, both below market expectations.
However, fresh 25% tariffs imposed by Trump on goods from Mexico, Canada, and China have heightened economic risks. Canada and China responded with retaliatory measures, and the European Union has announced plans to do the same. Companies like Walmart and Delta Air Lines have warned of weaker consumer demand, while electronics retailers expect tariff-driven price hikes. Analysts have raised concerns over recession risks and diminishing investor confidence in the US.
In Europe, inflation eased slightly, with eurozone CPI expected at 2.4% in February. Germany’s inflation held steady at 2.8%, while France and Cyprus saw notable declines. The European Central Bank delivered its sixth rate cut since it began easing in June last year, reducing the deposit rate to 2.5%. However, the ECB’s updated language suggests it is moving toward a more cautious stance on further cuts, indicating a potential pause after rapid easing over the past year.
Geopolitical EventsThe new US tariffs triggered escalating trade tensions, particularly with China, Canada, and the EU. Canada’s retaliation included duties on US metals and key consumer goods, while China introduced additional tariffs and export restrictions. Political rhetoric has intensified, especially between the US and China, raising fears of a prolonged trade war with widespread global implications.
Donald Trump announced on March 16 that talks between the US and Russia had started regarding the division of assets to end the Ukraine conflict. However, Vladimir Putin rejected a full ceasefire, agreeing only to stop attacks on Ukraine’s energy infrastructure for 30 days. He also conditioned any comprehensive ceasefire on ending foreign military aid to Ukraine, a demand Ukraine’s European allies have rejected. The US temporarily suspended military and intelligence support to Ukraine after a confrontation between Trump and Zelensky, further complicating the situation.
Market TrendsEquity markets in the US experienced a steep selloff in March, erasing post-election gains. Corporate earnings warnings across several sectors, from airlines to retail, reflected weakening consumer sentiment. In Europe, equity markets initially rallied on ECB rate cuts but later showed signs of caution as the central bank signaled a potential pause in its easing cycle.
Gold prices rose over the month, benefiting from increased demand for safe-haven assets as market volatility and geopolitical risks intensified.
Currency TrendsThe US dollar weakened over the past month, driven by lower Treasury yields and recession fears related to tariffs and trade tensions. Meanwhile, the euro strengthened against the dollar, while the US dollar saw mixed performance against other currencies, strengthening against the Canadian dollar and the British pound, but weakening slightly against the Japanese yen.
April Summary
Macroeconomic EventsIn the US, March’s nonfarm payrolls rose by 228,000, beating expectations, although the unemployment rate edged up to 4.2%. Average hourly earnings increased in line with forecasts but slowed to 3.8% year-on-year, the lowest pace since July 2024. While the labor marketremains resilient, uncertainty over President Donald Trump’s tariff policies could lead to more cautious hiring ahead. Inflation eased significantly, with March CPI falling to 2.4% year-over-year, down from 2.8% in February, while core CPI slowed to 2.8%, helped by a sharp decline in energy prices. However, financial markets and policymakers are bracing for future tariff-driven price increases.
The Federal Reserve is now expected to hold interest rates steady through the first half of the year. Despite initial pressure from Trump to cut rates more quickly, Fed officials, including Governor Christopher Waller, emphasized patience, noting that tariff effects would not fully materialize until after midyear. Financial markets have adjusted expectations, now anticipating the next rate cut likely in September or October rather than in May or June.
In Europe, inflation continued to ease in March, supporting the European Central Bank’s ongoing rate cuts. However, policymakers have indicated they may slow the pace of easing as economic conditions stabilize.
Geopolitical EventsTariff tensions dominated the geopolitical landscape. Trump initially implemented sweeping tariffs on imports from Mexico, Canada, and China, sparking fears of stagflation and damaging investor sentiment. Facing market turmoil and mounting domestic pressure, Trump walked back some tariffs on April 9, triggering a historic rally in US equity markets. However, tariffs on Chinese goods remain exceptionally high, with China showing no signs of re-engaging in negotiations. Chinese officials openly dismissed Trump’s claims of ongoing talks, highlighting deep mistrust and a hardened stance from Beijing. Analysts warned that policy unpredictability has already inflicted lasting economic and diplomatic damage, fostering a global push for strategic independence from the US.
Market TrendsMarkets experienced intense volatility. After Trump temporarily reduced tariffs for some trading partners, the S&P 500 surged 9.5% in a single day — its third-largest post-World War II gain — while the Nasdaq Composite posted a 12.2% jump. Nevertheless, optimism remains fragile, with analysts cautioning that underlying economic risks persist due to ongoing uncertainty and elevated tariff rates, especially against China. Traders continue to price in multiple Fed rate cuts for late 2025, but sentiment remains highly sensitive to developments in trade policy and inflation data.
In Europe, equities initially plunged following the announcement of new 10% tariffs by President Trump, but they rebounded after the tariffs were paused for 90 days, helping restore some investor confidence.
Gold performed strongly amid heightened economic uncertainty and volatility in financial markets.
Currency TrendsThe US Dollar Index fell 3.2% over the past month as concerns grew about the impact of the trade war initiated by President Trump, with fears of slowing growth, rising inflation, and diminished global confidence in the US. The euro strengthened by 4.2% against the dollar, while the US dollar also weakened against the Canadian dollar, sterling, and the Japanese yen.