Risk off was the pervading theme during March. Investor concern regarding the announcement of US tariffs in early April and their impact on global economic activity undermined investor confidence. An increasingly uncertain economic backdrop led investors to re-calibrate their views of future risks and focus on equity market valuations. In addition, an Australian federal election was called for 3rd May in a race that appears too close to call at this stage

The positive sentiment that propelled investment markets in January dissipated in February. The threat of tariffs on Mexico, Canada and China by the United States together with valuation concerns for mega-cap technology companies following announcements by DeepSeek in January and rising risks of stagflation all contributed to the more circumspect stance of investors.

Investment markets had a positive start to 2025. A ceasefire deal between Israel and Hamas was announced during the month and helped ease geo-political tensions. The ceasefire deal will be carried out in three stages with stage one of the ceasefire agreement expected to last 42 days.

Investors adopted a more cautious stance in December after November’s equity market rally in response to a Trump victory in the US Presidential Election. The major contributing factor to the more circumspect positioning of investors in December was the US Federal Reserve. In December the US Federal Reserve continued to lower cash rates with a cut of 25 bps that now sees the target cash rate move to a 4.25%-4.50% range. This move was widely anticipated by investors. The surprise for investors was that the US Federal Reserve’s new median rate projection for 2025 indicated just two 25 bps cuts for the year – down from four 25 bps cuts in September.

In November all eyes (and markets) were focused on the US election, and with a Trump win it set the tone for a rally in developed markets. US equities posted a strong gain of 6% in USD terms with all sectors and market captilisations up. Asian equities faired worse as the potential tariffs on Chinese exports into the United States saw Asian equities and, in particular Chinese equities, sell off on negative sentiment.

In October a rise in bond yields, coupled with a rising US dollar and waning impacts of the Chinese stimulus in September saw growth assets generally fall with bonds also producing negative returns.

In September, the US Federal Reserve cut the US Fed Funds rate by 0.5% to 4.75-5.00%. US inflation appears to be under control with August data revealing US inflation at an annualised rate of 2.5% p.a. much lower than the 9% p.a. peak seen in 2022. US employment whilst resilient has softened, justifying a more accommodative monetary policy stance. The European Central Bank also cut rates in the month by 25bps to 3.50% following on from their previous 25bps cut in June due to falling inflation and slower economic growth.