UK Market Commentary
UK equities rose in the first quarter, driven by strong performance from larger companies in the financial, energy and healthcare sectors. However, sentiment towards small-midsized companies remained weaker, due to concerns about the domestic outlook.
The news that the UK had narrowly avoided a technical recession provided little respite. In addition to this, the spring budget raised questions about the state of the UK economy. However, according to the ONS UK GDP rose in the first quarter, driven by services and production sectors. In contrast, the bank of England remained cautious and left rates unchanged.
US Market Commentary
US equities fell in the first quarter, driven by information technology and consumer discretionary sectors. Their top performing sectors were energy and healthcare.
The introduction of China’s version of ChatGPT DeepSeek, which allegedly cost a fraction of the price, caused markets to reassess their AI expectations and who is really the dominant force in the sector. AI has been a leading force for the US market, in particular the magnificent seven, and the news of DeepSeek undermined the high valuations for these companies.
On February 3rd, new tariffs went into effect, imposing a 25% duty on goods from Canada and Mexico and a 10% tariff on imports from China. While these measures were intended to protect American industries, they instead triggered market volatility and raised fears of a global economic slowdown. Towards the end of the quarter, investors braced for Donald Trump’s so-called “Liberation Day” and the announcement of additional trade tariffs on April 2nd. Coupled with public sector job cuts by Doge, many feared this would further strain U.S. consumers. Federal Reserve Chair Jerome Powell expressed concern, warning that the tariffs would likely increase inflation and reduce growth more than previously expected. As a result, the Fed held interest rates steady at 4.3%, pushing back against investor hopes for rate cuts later in the year.
Eurozone Market Commentary
Eurozone equities outperformed its peers due to a shift towards increased defence spending. Furthermore, the increase was driven by investors reassessing the high US valuations and wanting to rotate into other regions.
Stagnant economic data along with a decrease in inflation helped the European central bank to cut interest rates.
Global Events
China: China’s equity market had a turbulent first quarter but ultimately ended higher. News of DeepSeek and increased government stimulus helped increase investor confidence and were driving factors in the increase in equities over the quarter.
South Africa: South African equities performed well during the first sector, outperforming many other regions. This was due to the increase in the price of precious metals, causing the resources sector to perform well. Geopolitical uncertainty caused investors to flock to gold for a safe haven, causing it to have a standout performance over the quarter.
Commodities: Gold and Silver prices had standout performances in the first quarter as Investors looked for a safe haven. As well as gold touching all-time highs copper also performed well and reached an all-time high. However, despite seeing one of the biggest increases in price leading up to the year Cocoa’s price fell over the first quarter. In addition to Cocoa wheat and cotton also saw price decreases over the quarter.
Past performance is not a reliable indicator of future returns. The value of investments and the income from them can go down as well as up, so you may not get back what you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. Changes in currency exchange rates may affect the value of an investment in overseas markets. Investments in small and emerging markets can also be more volatile than other more developed