Calming influences

By Greg Smith, Head of Retail at Devon Funds

April was another volatile month for financial markets, but one that in the end produced a relatively benign outcome for investors. Trade developments were front and centre, with the angst around “Liberation Day” replaced by relief as Donald Trump announced a 90-day pause for trading partners to negotiate trade deals. Frictions with China also ebbed and flowed as tit-for-tat tariff increases gave way to olive branches, and exemptions on various categories of goods, and as the talk of the potential for negotiations continued to bubble away. After a hectic and volatile month, US markets staged a huge comeback – the S&P500 was down 11% at one point, but closed April down just 0.7%, and just 9% off its record high, set in February. The tech sector surged back, with the Nasdaq closing the month 1.6% higher.

Donald Trump’s “Liberation Day” put markets on the back foot at the start of the month, but investor nerves were soothed in dramatic fashion as Trump announced a 90-day tariff pause and lowered the baseline on many countries to 10%. The S&P 500 has since recovered all the ground lost post April 2. The benchmark recently rose for nine consecutive days, the longest winning streak in the last 20 years.

The Trump administration went on to claim that “200 deals” were in the pipeline, and that this was “always part of the plan.” The alternative theory is that Trump buckled to pressure from within his own party, his innercircle, trading partners, corporates, polls, and possibly most significantly, the market meltdown.