The ‘Sturm und Drang’ of the tariff regime instituted by US President Trump remained the main feature for world markets in April 2025, with the overly aggressive and wide-ranging tariff increases announced on the 2 April causing a sharp sell-off in risk-assets worldwide. Markets focused on the negative implications for both US and global economic growth going forward. However, President Trump backtracked on his announcement on 9 April, postponing the tariff increases by 90 days which caused a strong rebound in most markets, other than in China, with risk-aversion subsiding.

US Markets had a mixed month due to the tariff announcements, with the Nasdaq being the star performer, up marginally by 0.9%, the S&P 500 ending April lower by 0.8%, and the Dow Jones bearing the brunt of the weakness, ending the month lower by 3.2%. On the economic front, US headline inflation for March (CPI), eased more than expected printing at 2.4% YoY vs the February print of 2.8% YoY, with core CPI, which excludes energy and food, printing at 2.8% YoY.

Consumer confidence in the US declined for the fifth month in a row to levels last seen during the Covid pandemic with inflation expectations elevated as uncertainty around the trade tariffs continues to weigh. The April Consumer Confidence Index (CCI) dropped to 86, below the March reading of 92.2 and lower than the consensus expectation of 88. Core personal consumption expenditure (PCE), which is the Fed’s preferred inflation gauge, rose 3.5% YoY, sharply up from February ‘s 2.8%.

Of concern is the attack on the Fed’s independence, with the threat by President Trump to remove Fed’s Chair, Jerome Powell, despite the fact that he had appointed him in 2018 - a threat he later walked back on.

The IMF forecast a cooling in US growth for 2025 to 1.8%, flagging tighter financial conditions as well as interest rates, while maintaining 2025 US inflation outlook at 3% for 2025. The IMF also noted increased recession risk in the US, from 25% in October 2024 to 40% in 2025 with concerns relating to fiscal and trade policies that could impact consumer spending and business investment. US policymakers are therefore juggling a difficult balancing act supporting growth while keeping inflation in check.

The UK market also ended in April weaker with the FTSE closing lower by 1.0% as UK inflation for March eased for the second month to 2.6% from the February print of 2.8%. Core inflation slowed marginally in March, printing at 3.4% vs the February reading of 3.5%. UK growth is forecast to be subdued, declining by 0.5% to 1.1% in 2025, with weak private consumption, increasing inflation risk on the back of higher energy costs, as well as the impact of US tariffs behind the slowdown. With continued concerns about high public debt limiting fiscal maneuvering, similar to their US counterparts, UK policy makers also have a tough act balancing increased growth while tackling inflation and structural headwinds.

Equity markets in Europe ended the month mixed as the Dax rose by 1.5% as Germany’s fiscal spending in opposition to Trumps tariffs buoyed the market. In contrast, the Cac ended the month lower by 2.5%. On the economic front headline inflation in the Eurozone continued to ease in March printing at 2.2% YoY vs the February print of 2.3% YoY, while core inflation printed at 2.4%, the lowest since October 2021. Inflation in the Eurozone is expected to fall to 2.1% in 2025, versus 2.4% a year ago, close to the ECB’s target. The upward risk from trade restrictions, wage demands, and geopolitical strains could further erode investment from business as well as consumer sentiment.

Asian markets were not immune to the tariff fallout with China being hardest hit with broad-based tariffs of 145% on all US bound goods and being excluded from the 90 days pause on tariff implementation. The Hang Seng fell by 4.3% with the Shanghai Composite lower by 1.7%. On the economics front there was a slowdown in the official Chinese April PMI to 49.0 from 50.5 in March, while non-manufacturing PMI, which includes construction and services, also fell to 50.4 from the previous reading of 50.8.  A reading above 50 equals expansion, while one below 50 suggests contraction.

Chinese growth is forecast to slow in both 2025 and 2026 to 4.0%, reflecting the impact of trade tariffs, as well as trade policy uncertainty and deflationary pressures, and weak domestic demand. Consumer confidence has not recovered since 2022, which continues to dampen consumption. China’s inflation is forecast to rise marginally from 0% in 2024 to 0.4% in 2025 and 0.9% in 2026, underlining the need for reforms in China to boost demand.

In Japan, the Nikkei clawed back some losses, ending the month higher by 1.2% despite concerns over the negative impact of tariffs on the Japanese economy. Core inflation for March accelerated to 3.2% compared to the February print of 3.0%, which was in line with expectations. The IMF indicated that the Japanese economy is constrained, with growth projected to decline to 0.6% in 2025, a 0.5% downgrade from the January forecasts, with the trade tariffs weighing on private consumption, despite above inflation wage growth boosting household disposable income.

Inflation in Japan is expected to rise gradually due to persistent price pressures and energy costs. Japanese fiscal policy remains constrained as public debt levels are among the highest globally which limits room for expansion. Structural reforms to enhance flexibility in the labour market and increasing productivity are critical in boosting long-term growth.

South Africa

On the local market we saw a recovery in most sectors notwithstanding continued concerns over the possible unravelling of the GNU and global trade tensions weighing on the bourse. Global trade disruptions continue to threaten exports by dampening demand from South Africa’s key trading partners, including China and the EU.

The JSE ALSI ended April higher by 3.3%, with more broad-based gains than in March. Property was the outstanding sector for the month, rising 6.1%, followed by industrials, which were up 4.9% over the period. The resources sector was stronger by 2.3%, largely driven by gold, with financials ending firmer at 2.2% for the month.

Selected top performing shares for the month were Anglogold, up 13%, Woolworths up 12.9%, Capitec up 10.9%, Redefine up 10.5%, Attacq up 9.5%, KAP also up 9.5%, and Naspers up 8.3%. Underperformers for the period were Aspen, down 25.6% (33% lower at one point on the back of an announcement that a contract dispute could cut core earnings for FY25 by almost half or close to R2bn). Further downside was experienced by Sasol, down 16.1%, Impala, down 12%, and Glencore down by 11.6%.

On the economics front, March headline inflation data surprised on the downside, printing at 2.7% YoY, largely on the back of the continued decline in fuel costs. March Core inflation also moderated, slowing to 3.1% YoY, down from the 3.4% YoY print in February, indicating continued easing in underlying inflationary pressures in the local economy.

Finally, the extremely contentious 0.5% VAT hike mooted in the national budget 2.0 was scrapped, with a third, and hopefully final, attempt at passing the 2025/26 budget to be tabled in Parliament on 21 May 2025.