April witnessed a dramatic rollercoaster for global markets. Initial tariff-driven fears caused steep declines, but these losses were largely reversed by month-end as the Trump administration showed a willingness to negotiate and investors reassessed the situation. The month also saw legendary investor Warren Buffett announce his retirement, offering a calm perspective on the market

Navigating the market storm following 'Liberation Day'

April 2025 will be remembered as a month of sharp market movements that really tested the nerves of many investors. The beginning of April saw a pronounced sell-off in global markets following the announcement of new tariffs by the United States. The move, announced on April 2nd, President Trump's self-proclaimed 'Liberation Day', sparked immediate concern about the potential for escalating trade tensions and a slowdown in global economic growth.

This uncertainty led to a swift sell-off across various asset classes. The US S&P 500 Index fell 12.1% in just four trading days, while the tech-heavy Nasdaq Index fell 13.3%. At one point in April, the US market had fallen over 20% from its peak in February.

As tensions and tariff levels escalated, particularly between the US and China, economists started forecasting a sharp spike in US inflation, and a slowdown in growth, with some investment banks forecasting a recession. With tariff rates of 20-30%+ proposed for many major trading partners and over 100% for China, the adjustments required to prices, supply chains and the potential impact on consumer demand, spooked investors.

Tariff fears subside and markets recover as Trump’s intent to negotiate becomes clear

However, on April 9th, a 90 day pause on tariffs was announced and market sentiment abruptly shifted. Investors started to interpret the initial tariff announcements not as concrete, immovable policy, but rather as a starting point for trade negotiations – leading to a 9.5% spike in the US market.

This reassessment fuelled a steady recovery in market confidence throughout April. As commentary from the US Treasury Secretary started to convey progress on negotiations with India and Japan, along with President Trump indicating a softening of his stance towards China, the selling pressure abated. By the end of the month, many major indices had recouped their initial losses, and in some instances moved into positive territory for April. This remarkable turnaround in a few short weeks highlights the danger of making rash investing decisions in response to short-term market shocks.

Warren Buffett's farewell and enduring wisdom

Adding a significant footnote to market developments over the last month was the announcement from famed investor, Warren Buffett, regarding his retirement from Berkshire Hathaway. While marking the end of an era for the investment world, Buffett’s commentary provided a valuable perspective. He characterised the market turbulence experienced in April as a bit of a blip, saying that “what has happened in the last 30, 45 days … is really nothing”. His commentary reinforced the long-held principle that short-term market swings shouldn't overly concern investors focused on the long game.

Stay the course

The events of April serve as a powerful reminder of the importance of maintaining a disciplined and long-term investment strategy. While short-term market shocks are inevitable, reacting emotionally by selling into downturns can be a costly mistake. Maintaining a well-diversified portfolio and focusing on long-term fundamentals remains the most effective way to navigate market volatility and achieve long-term investment success.

Talk to us

If you have any questions about your investment or would like to make sure you have the right investment strategy to reach your ambitions, get in touch with us – our team are always happy to help.