U.S. trade policy concerns lead to market volatility.

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 safe-haven 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.

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.

Disclosures 

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. This information should not be relied upon by the reader as research or investment advice regarding SEI’s portfolios or any stock in particular, nor should it be construed as a recommendation to purchase or sell a security, including futures contracts. 

There are risks involved with investing, including loss of principal. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Narrowly focused investments and smaller companies typically exhibit higher volatility. Bonds and bond funds will decrease in value as interest rates rise. High-yield bonds involve greater risks of default or downgrade and are more volatile than investment-grade securities, due to the speculative nature of their investments. 

Diversification may not protect against market risk. Past performance does not guarantee future results. Index returns are for illustrative purposes only and do not represent actual portfolio performance. Index returns do not reflect any management fees, transaction costs or expenses. One cannot invest directly in an index. 

Information provided by SEI Investments Management Corporation, a wholly owned subsidiary of SEI Investments Company (SEI).