Share prices declined sharply in early April following “Liberation Day” – US President Donald Trump’s plan to “liberate” the US from the perceived unfairness of trading arrangements with the rest of the world.
The US subsequently rolled back on tariffs ranging from 10% to 50%, announcing a 90-day pause for all countries bar China. Stock markets have since largely recovered, as fears of a US and global recession have subsided, but remain jittery due to the ongoing uncertainty.
The S&P 500 Index briefly entered bear market territory in early April, falling more than 20% from its February peak, before rebounding in the final days of the month with a rally in technology shares. As of 16 June, all three of the major US indices (S&P 500, Dow Jones Industrial Average and Nasdaq Composite) have posted modest gains year to date.
The chaotic trade policy was thrown into fresh disarray as the US Court of International Trade ruled that the President had exceeded his authority and the tariffs were illegal; nevertheless, they will remain in place while the Trump administration appeals the ruling.
The US House of Representatives passed President Trump’s “One Big Beautiful Bill”, raising concerns about the potential impact on US national debt. Meanwhile, the US Federal Reserve maintained its key interest rate at a range of 4.25% to 4.5%, prioritising its concerns over higher inflation over attempting to boost a weakened US economy.
Having grown at an annualised rate of 2.4% in the final quarter of 2024, the US economy contracted by 0.3% in the first three months of 2025. Import activity rose sharply as companies sought to get ahead of the President Trump’s anticipated tariffs. The International Monetary Fund (IMF) cut its 2025 growth forecast for the US by 0.9 percentage points to 1.8%, citing “greater policy uncertainty, trade tensions, and a softer demand outlook”; tariffs are expected to continue to hamper growth in 2026.
In the UK, the Bank of England Monetary Policy Committee (MPC) voted by five to four in favour of cutting the key base rate from 4.5% to 4.25% in May, taking UK rates to their lowest level for two years.
The UK economy expanded by a better-than-expected 0.7% during the first quarter of 2025, boosted by activity in the services sector. However, UK Consumer Price Inflation (CPI) rose sharply in April to 3.5% (from 2.6% in March), partly due to an increase in domestic energy prices.
The British Retail Consortium warned that confidence amongst UK businesses and consumers remains fragile against a backdrop of rising global prices, higher employer National Insurance contributions, and an increased National Living Wage. However, as of 16 June, the FTSE100 had posted a gain of around 7% year to date, with the more domestically focused FTSE250 gaining almost 3%.
Meanwhile, the European Central Bank (ECB) has continued to cut its interest rate as inflation in the Eurozone has stabilised. The key ECB interest rate has reduced from a recent high of 4% and currently stands at 2%, following four separate 25 basis point cuts so far this year.
Germany’s economy expanded by a revised 0.4% over the first three months of 2025, compared with a contraction of 0.2% in the final quarter of 2024. Overall growth was boosted by activity in manufacturing and exports.
Closer to home, the unemployment figure for Northern Ireland hit another record low of 1.6% for the first quarter of 2025, well below the UK rate of 4.5%. However, this measure does not tell the full story, with the rate of economic inactivity (those not looking for work due to studying, caring responsibilities or illness/disability) rising to 27.2%, well above the UK rate of 21.4%.
The median Northern Ireland wage increased to £2,427 per month in April, an increase of 10.9% on the previous year.
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The value of your investment can go down as well as up and you may not get back as much as you originally invested.