Global equities, as measured by the MSCI ACWI Index, saw a modest overall upturn in April. However, there was disparate performance among markets due to a slump in the U.S. market amid volatility in response to numerous changes in the trade policies of the administration of President Donald Trump. Emerging markets underperformed developed markets, with the notable exception of the U.S. As measured by the MSCI USA Index, U.S. stocks posted modestly negative returns and significantly lagged their European and Asian counterparts, as represented by the MSCI Europe Index and the MSCI Pacific Index, respectively.

The Pacific region was the top performer in the developed markets for the month, led by notable upturns in Australia and Japan. Europe also performed well due mainly to strength in Portugal, Germany, and Belgium. Conversely, North America was the weakest-performing region as the tariff-induced decline in U.S. stocks offset gains in Canada. Latin America led the emerging markets in April attributable largely to significant rallies in Mexico and Colombia. Additionally, Eastern Europe was bolstered by strength in Hungary, Greece, and Poland. Chinese stocks listed on the Hong Kong Stock Exchange were the most notable emerging-market laggards in April. The Gulf Cooperation Council (GCC) countries also recorded negative returns during the month.1

On April 2, the Trump administration announced a blanket minimum tariff of 10% for all imports, and imposed so-called reciprocal tariffs on multiple countries (with the exception of goods from Canada and Mexico covered under the U.S.-Mexico-Canada Agreement). However, shortly thereafter, Trump announced a 90-day suspension of these reciprocal tariffs, with exception of China. The action followed a brief period of significant volatility in the U.S. Treasury market. The yield on the 10-year U.S. Treasury note rose sharply on fears that the tariffs could have a negative impact on the economy and reignite inflation. Bond prices and yields move inversely. The yield subsequently retreated after the announcement of the tariff suspension. 

Later in the month, investors were encouraged after Treasury Secretary Scott Bessent told attendees at a private investor summit that he believes the trade war with China is unsustainable and that both countries need to alleviate the geopolitical tensions between the world’s two largest economies. Additionally, Trump indicated that he was considering a reduction of the 145% tariffs on Chinese imports. “It won’t be that high,” he noted. “It will come down substantially. But it won’t be zero. It used to be zero.” The ongoing tariff dispute remains highly volatile and in constant flux.

Global fixed-income assets, as measured by the Bloomberg Global Aggregate Bond Index, gained 2.9% (in U.S. dollars)in April. U.S. Treasury securities and mortgage-backed securities (MBS) were the strongest performers within the U.S. fixed-income market, while investment-grade corporate bonds and high-yield bonds posted virtually flat returns. Yields were mixed in the short segment of the Treasury curve during the month, and moved lower for all maturities of one year or greater. Yields on 2-, 3-, 5-, and 10-year Treasury notes fell by corresponding margins of 0.29%, 0.31%, 0.24%,, and 0.06% to 3.60%, 3.58%, 3.72%, and 4.17%, respectively.2 The Treasury yield curve remained inverted (three-month yields exceeded 10-year yields), which historically has predicted economic recessions.

Global commodity prices, as represented by the Bloomberg Commodity Index, fell 4.8% in April. The West Texas Intermediate (WTI) and Brent crude oil prices declined 18.6% and 18.3%, respectively, during the month due to worries that the U.S. tariffs and retaliatory measures from China will weigh on global economic growth and the demand for oil. The gold price again reached multiple record highs over the month, rising 5.4% as investors sought safehaven assets amid concerns about the tariffs, as well as a decline in the U.S. dollar. (The gold price typically moves inversely to the greenback.) The 11.8% decline in the New York Mercantile Exchange (NYMEX) natural gas price for the month was attributable to an increase in production and a downturn in demand due to relatively warm weather in the U.S. Wheat prices were down 1.2% in April, hampered by an increase in stockpiles globally as well as a rise in exports.

On the geopolitical front, in late April, Trump indicated that his administration would end negotiations to end the Russia-Ukraine war if the leaders of the two nations ““make it very difficult” to reach a peace agreement. He also commented that a truce was not imminent, but he wanted to complete a deal “quickly.” U.S. Secretary of State Marco Rubio echoed Trump’s comments. “We’re not going to continue with this endeavor for weeks and months on end,” he said.3

Three days later, Russian President Vladimir Putin announced a three-day ceasefire (May 8-10) in the conflict to enable Russia to celebrate the 80th anniversary of the surrender of Nazi Germany to the Soviet Union and its allies in World War II. In a social media post, Ukrainian Foreign Minister Andrii Sybiha noted, “If Russia truly wants peace, it must cease fire immediately. Why wait until May 8th?” Ukrainian President Volodymyr Zelenskiy had previously indicated that Ukraine would be willing to participate in peace negotiations with Russia if a ceasefire deal led to a pause in the fighting.4

In Canada, the Liberal Party defeated the Conservative Party by a margin of 44%-41% and won 169 of 343 seats in Parliament in the national election on April 28. However, as the Liberals did not secure a majority in Parliament, Prime Minister Mark Carney will need support from Conservatives to enact an economic plan to deal with the Trump administration’s trade policies. Carney’s main political opponent, Conservative Party leader Pierre Poilievre, lost his seat in Parliament, which he had held since 2004.

Economic data

U.S.

The Department of Labor announced that the consumer-price index (CPI) dipped 0.1% in March, down from the 0.2% rise in February and below expectations. Energy costs fell 2.4%, as gasoline prices tumbled 6.3% for the month, offsetting higher costs for electricity and natural gas. Food costs rose 0.4% in March, up from the 0.2% increase in February. The CPI advanced at a lower-than-expected rate of 2.4% year-over-year—the smallest 12-month increase since March 2021—and was down from the 2.8% annual upturn in the previous month. Costs for utility gas service and housing climbed 9.4% and 4.0%, respectively, over the previous 12-month period, while gasoline and fuel oil prices declined by corresponding margins of 9.8% and 7.6%. Core inflation, as measured by the CPI for all items less food and energy, rose 2.8% year-over-year in March, lower than market expectations and down from the 3.1% annual increase in February.

According to the initial estimate from the Department of Commerce, U.S. gross domestic product (GDP) decreased at an annualised rate of 0.3% in the first quarter of 2025—down sharply from the 2.4% increase in the fourth quarter of 2024. The economic contraction in the first quarter was attributable mainly to a surge in imports (which are subtracted from GDP), and a decline in government spending. Conversely, there were increases in nonresidential fixed investment (purchases of equipment and software, and nonresidential structures), consumer spending, and exports.

U.K.

The Office for National Statistics (ONS) reported that inflation in the U.K., as measured by the CPI, increased 0.3% in March, slightly below than the 0.4% rise in February. The CPI advanced at an annual rate of 2.6% in March, down from the 2.8% year-over-year increase for the previous month. Costs for clothing and footwear, restaurants and hotels, and furniture and household goods posted the largest gains in March, while prices for food and non-alcoholic beverages, recreation and culture, and education were flat. Education, communication, alcohol and tobacco prices climbed 7.5%, 6.0%, and 5.3%, respectively, over the previous 12-month period. Core inflation, which excludes volatile food, energy, and alcohol and tobacco prices, increased at an annual rate of 3.4% in March, moderating from the 3.5% yearover- year upturn in February.5

The ONS also announced that U.K. GDP increased 0.5% and 0.6% in February and over the previous three months (the most recent reporting periods), respectively. Production and services output saw corresponding increases of 0.7% and 0.6% over the previous three-month period, while output in the construction sector was flat.6

Eurozone

Eurostat pegged the inflation rate for the eurozone at 2.2% for the 12-month period ending in March, down marginally from the 2.3% annual upturn in February. Costs in the services sector rose at an annual rate of 3.5%, a modest decline from the 3.7% increase in February. Prices for food, alcohol and tobacco increased 2.9% year-over-year in March, up from the 2.7% annual rate for the previous month. Core inflation, which excludes volatile energy and food prices, rose at an annual rate of 2.5%, slightly lower than the 2.6% year-over-year increase for the previous month.7

Eurostat also reported that eurozone GDP rose 0.4% the first quarter of 2025, representing slight improvement over the 0.2% growth rate for the fourth quarter of 2024. Eurozone GDP increased 1.2% over the previous 12-month period. The economies of Ireland, Lithuania, and Spain were the strongest performers for the first quarter, increasing 10.9%, 3.2%, and 2.8%, respectively. In contrast, GDP in Austria, Hungary, and Germany saw corresponding declines of 0.7%, 0.4%, and 0.2% during the month.8

SEI’s view

Under the Trump administration’s reciprocal tariffs, the assumed levies imposed by other countries were calculated based on trade imbalances, not actual tariff rates. Consequently, if a country has a large trading surplus with the U.S., that is considered a “tariff” rate that should be countered by the U.S. We think that the logic behind this calculation is dubious at best. Economists are stunned, and the implications are quite significant given that, while a tariff rate can be negotiated, the current trading arrangements (which are the results of years of industrial planning) cannot. 

Uncertainty is one of the clear certainties of capital markets. In fact, any endeavor that involves discounting the future (such as investing) exists in the realm of uncertainty. There are times, however, when uncertainty feels more… present. We think that most would agree that our current moment clearly falls into that category, and for good reason.

More tactically, our expectations for a broadening of equity market performance have certainly played out from a geographic perspective. While there are no more true bargains to be had, we continue to favour broad global exposures. Corporate earnings guidance has been understandably mixed given the political overhangs, but we expect the outlook to improve with some additional clarity and as more market-favourable developments (such as deregulation in the U.S.) begin to progress. Our tactical leaning into value remains in place, as we expect value stocks to continue to benefit from market dynamics, including stubborn inflation, higher interest rates, and a reassessment of the AI landscape. From a sector perspective, we generally favour sectors such as financials, industrials, and consumer staples.
 

Within fixed-income markets, we remain negative on long-term interest rates both in the U.S. and in Europe. German stimulus measures are potentially just the beginning of a reset across the continent related to spending priorities. However, while Germany has room to increase spending on defense and infrastructure given its modest debt-to-gross-domestic-product ratio, the remainder of Europe is in a much more precarious situation. This prospect for additional stimulus broadly across the continent in addition to the already stubborn inflationary readings, continues to give us confidence that the path of least resistance for longer-term global interest rates is higher.

We reiterate that it is far too early to predict the outcome of U.S. trade policy on the global economy and financial markets. We don’t know what the short term will bring, but we are confident that the long-term direction of the stock market is higher. We are also confident that a diversified portfolio is a prudent approach to investing. If one has a solid investment strategy in place, market volatility is not a reasonable catalyst for change.

Glossary of Financial Terms

Yield is the income returned on an investment, such as the interest received from holding a security. The yield is usually expressed as an annual percentage rate based on the investment’s cost, current market value, or face value.

Yield curve represents differences in yields across a range of maturities of bonds of the same issuer or credit rating (are (which is used to assess the risk of default of companies or countries). A steeper yield curve represents a greater difference between the yields. A flatter curve indicates that short- and long-term yields are closer together.

Monetary policy refers to decisions by central banks to influence the amount of money and credit in the economy by managing the level of benchmark interest rates and the purchase or sale of securities. Central banks typically make policy decisions based on their mandates to target specific levels or ranges for inflation and employment.

Index definitions

The MSCI ACWI Index is a market capitalization-weighted index that tracks the performance of over 2,000 companies, and is representative of the market structure of 48 developed and emerging-market countries in North and South America, Europe, Africa, and the Pacific Rim. The index is calculated with net dividends reinvested in U.S. dollars.

The MSCI USA Index tracks the performance of the large- and mid-cap segments of the U.S. equity market. The index’s 624 constituents comprise approximately 85% of the free float-adjusted (i.e., including only shares that are available for public trading) market capitalization in the U.S.

The MSCI Europe Index tracks the performance of large- and mid-cap stocks across 15 developed-market countries in Europe. 

The MSCI Pacific Index tracks the performance of large- and mid-cap stocks across five developed-market (DM) countries in the Pacific region.

The Bloomberg Global Aggregate Bond Index is a market capitalization-weighted index that tracks the performance of investment grade (rated BBB- or higher by S&P Global Ratings/Fitch Ratings or Baa3 or higher by Moody’s Investors Service) fixed-income securities denominated in 13 currencies. The index reflects reinvestment of all distributions and changes in market prices.

The S&P US Mortgage Backed Securities Index tracks the performance of U.S. dollar-denominated, fixed-rate and adjustable-rate/ hybrid mortgage pass-through securities issued by Ginnie Mae (GNMA), Fannie Mae (FNMA) and Freddie Mac (FHLMC).

The ICE BofA U.S. Treasury Index tracks the performance of the direct sovereign debt of the U. S. government.

The ICE BofA U.S. Corporate Index includes publicly issued, fixed-rate, nonconvertible investment-grade (rated BBB- or higher by S&P Global Ratings and Fitch Ratings or Baa3 or higher by Moody’s Investors Service) dollar-denominated, U.S. Securities and Exchange (SEC)-registered corporate debt having at least one year to maturity.

The ICE BofA U.S. High Yield Constrained Index is a market value-weighted index of all domestic and Yankee high-yield bonds, including deferred interest bonds and payment-in-kind securities, with maturities of one year or more and a credit rating of BB+ or lower by S&P Global Ratings and Fitch Ratings or Ba1 or lower by Moody’s Investors Service, but are not in default.

The Bloomberg Commodity Index tracks the performance of futures contracts on physical commodities. The index comprises 24 of the most traded commodity futures contracts across six sectors.

Consumer-price indexes measure changes in the price level of a weighted-average market basket of consumer goods and services purchased by households. A consumer price index is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically.

Important Information

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Positioning and holdings are subject to change. All information as of the date indicated.

This information should not be relied upon by the reader as research or investment advice, (unless you have otherwise separately entered into a written agreement with SEI for the provision of investment advice) nor should it be construed as a recommendation to purchase or sell a security. The reader should consult with their financial professional for more information. Statements that are not factual in nature, including opinions, projections and estimates, assume certain economic conditions and industry developments and constitute only current opinions that are subject to change without notice. Nothing herein is intended to be a forecast of future events, or a guarantee of future results.

Certain economic and market information contained herein has been obtained from published sources prepared by other parties, which in certain cases have not been updated through the date hereof. While such sources are believed to be reliable, neither SEI nor its affiliates assumes any responsibility for the accuracy or completeness of such information and such information has not been independently verified by SEI.

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