MARKETS IN A NUTSHELL — FOR APRIL 2025

April began as if the markets had fallen victim to an April Fool’s joke — but investors weren't laughing. US President Trump’s much anticipated ‘Liberation Day’ tariffs took effect on 2 April, and all countries suffered a 10% baseline tariff. Additional reciprocal tariffs targeted 60 countries and territories with swingeing duties in proportion to their trade surpluses with the US. China was hit especially hard in aggregate. 

This abrupt escalation of US tariffs rattled markets, wiping trillions of dollars off share valuations in the first few days. The White House soon balked. Trump suspended most of the tariffs for 90 days, but doubled down on China — dramatically ramping tariffs on Chinese goods to 125%. Beijing retaliated with an 84% levy on US goods, cementing a rapid escalation of the US-China trade war. This whipsaw policy response sowed confusion, stoked recession fears, and sent investors scrambling for safe-haven assets.

The US S&P 500 Index fell by double digits, but quickly recovered when most of the tariffs were paused. European markets were also lower but gained when measured in US dollars. The Chinese DeepSeek share rally faltered, with stocks dropping 4.5% on trade war implications.

Investors flocked to safety, driving global bond prices higher and yields sharply lower — and boosting gold, which hit an intra-month all-time high of $3,500 per ounce. Meanwhile, recession worries battered oil prices. Brent crude tumbled 15%. Industrial metals reflected similar concerns, with copper down amid fears of slower global manufacturing. The US dollar traded broadly weaker against peers in anticipation of rate cuts needed to cushion the trade war's economic impact, as well as non-US central bank selling.

South Africa wasn't immune from shenanigans. Political uncertainty flared mid-month over GNU disputes regarding the on-again-off-again VAT increase. The Budget turmoil and South Africa’s high 30% reciprocal US tariff briefly sent the rand towards R20 to the dollar. However, local markets were surprisingly resilient. The FTSE/JSE All Share Index rose 4.3%, led by gains in financials and industrials counters.

The Foord global funds produced mixed results. The conservative multi-asset Foord International Fund gained despite the volatility — with the low US exposure, defensives, utilities and gold holdings adding value. The Foord Global Equity and Foord Asia ex-Japan funds retraced some of their year-to-date gains, after Chinese bourses traded lower. The Foord multi-asset funds in South Africa were nicely positive, but lagged peers, while the Foord Equity Fund also gained meaningfully. The fixed income suite shined this month: the managers’ preference for lower risk assets paying off in the turmoil.

Despite the market’s quick recovery, we remain concerned about the effect of the trade war on the real economy. Worrying signs abound for the US. GDP growth fell in the first quarter — and the trade deficit widened — as traders front-ran the tariffs. Consumer sentiment is plunging, despite a resilient jobs market. Policy uncertainty is sky high, and the US debt burden continues to balloon. The tariff war will undeniably inflict pain on the Chinese economy. However, in many ways it may be the more resilient of the two economic superpowers.

Foord’s positioning therefore remains cautious, with a lower weight to US assets. We hold sufficient cash to exploit selective opportunities as they emerge, maintaining gold exposure as a buffer against uncertainty. Our focus continues to be on quality companies with strong fundamentals, and trading at attractive valuations.