OIM Global Review: Market Performance

March 2025

World markets had a volatile February as the Trump tariff tantrum raised investor concerns regarding the potentially negative impact the administration’s policies could have on the US economy as well as the fact that risk-off sentiment prevailed. Concerns persisted regarding higher inflation and its impact on the US rate cutting cycle, as well as escalating geopolitical tensions between the US and China, and the US and Europe continued to weigh.

US markets were weaker in February, with the S&P 500 ending down by 1.4%, the Dow Jones lower by 1.6%, and the Nasdaq being the worst performer, ending the month weaker by 4%. On the economics front, January headline inflation (CPI) printed higher than expected at 3.0% YoY, signalling renewed price pressures, while core CPI, excluding food and energy, printed at 3.3% YoY. Commentary from the Fed indicated that higher for longer rates were at the forefront of its thinking with inflation concerns influencing rate cuts. During his presentation to the US Congress, Fed Chairman, Jerome Powell reiterated that there is no rush to cut rates, and although the US Economy remains strong, uncertainty about future policy decisions persists.

By contrast, the UK market ended the month on a stronger footing, closing higher by 1.6%, while inflation for January shot up unexpectedly to 3.0% compared to December’s 2.5%. Core inflation also printed higher in January at 3.7% vs the December figure of 3.2%.

Although taking strain from the threatened Unites States’ 25% potential tariff hikes on the EU, European markets shrugged this off, ending the month in the black. The Dax ended the month higher by 3.8%, post German elections. Chancellor elect, Frederich Merz, sought to ease the rift with the US as President Trump appeared to favour Russia. In France, the Cac closed the month higher by 2%. On the economics front, January headline inflation in the eurozone rose for the fourth consecutive month, printing at 2.5% YoY compared to the January number of 2.4% YoY, while core inflation remained steady at 2.7% for the fifth month.

Asian markets were volatile in February as President Trump fixed his attention on China, as differences on trade, investment and other issues heightened the risk of worsening relations between the two superpowers. The Chinese market regained some ground as positive steps were taken by President Xi Jinping in meeting with the country’s top private sector leaders to boost economic rescue efforts. Encouraging the private sector’s role in reviving the stuttering Chinese economy has been viewed positively. The Hang Seng was higher by 13.4%, while the Shanghai Composite was firmer by 2.2%. 

In Japan, the Nikkei experienced a significant decline of 6.9% for the month, largely due to a sell-off in chip related companies, as well as concerns regarding how higher tariffs would affect its market. Japanese core inflation for January rose to a higher than expected 3.2% YoY, reinforcing persistent price pressure concerns.