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Monthly Market Wrap: April 2025
Big U-turns prevent a meltdown in financial markets.
Key points
United States: Big U-turn on tariffs.
UK/Europe: ECB cut rates.
Asia: China retaliated with tariff increases.
South Africa: Retraction of VAT increase/JSE reached new high.
United States
Trump softened his economic and trade stances, imposing a 90-day pause on many of the tariffs he had put in place just days earlier. He maintained a 10% universal rate on all trading partners except Canada and Mexico, which have been spared from the baseline rate. The tone on China was softened after ratcheting tariffs up to 145%.
The US economy shrank in Q1 as imports surged ahead of tariffs. Annualised GDP was down 0.3% q/q.
The US 10-year Treasury yield calmed following Trump’s U-turn on tariffs, dropping below 4.2%, after shooting up to nearly 4.5% earlier in the month.
The dollar tumbled as traders liquidated US assets in favour of haven currencies like the Swiss franc, which surged by the most in a decade.
Markets have staged a major rebound since the U-turn on tariffs, but major indices such as the S&P 500 Index were still down 0.7% for the month. The MSCI AC World Index managed to turn out a small return of 0.9%.
UK/Europe
The ECB cuts rates for third time this year as Europe braces for Trump tariffs. Growth remains sluggish, growing by only 0.4% in Q1. Inflation remained unchanged at 2.2% in April.
Volkswagen AG’s earnings dropped 40% in the first quarter as higher manufacturing costs cut into margins and US tariffs clouded the German carmaker’s outlook.
Asia
The Bank of Japan left rates unchanged at 0.5%,while pushing back the timing for when it expects to reach its inflation target and reducing its growth forecasts.
The gloves are off – China raised tariffs on all US goods from 84% to 125%.
South Africa
Inflation eased to an almost five-year low. CPI rose 2.7% in March compared to the 3.2% rise seen in February on a year-over-year basis. SA’s plummeting mining output is expected to hit GDP in 2025.
Godongwana caved – VAT rate remained at 15% from 1 May.
The JSE closed at a new high, with the ALSI topping 91 500 points. It was up 4.3% for the month, led by rand hedge shares i.e. Naspers, British America Tobacco (BAT) and AB Inbev, which were all up more than 5%. Capitec Bank surged 10% after good results.
The once mighty Murray & Roberts is to be wound up. The main businesses in mining will be sold to a consortium of investors led by Differential Capital.
