Despite the optimism at the start of 2025, the escalation of a trade conflict initiated by the US introduced notable volatility and uncertainty into global equity markets. During the quarter, global equities returned -1.3%, international developed, emerging markets, and U.S. equities returned 6.9%, 2.9%, and -4.7%, respectively. While tariffs were anticipated following the US election, the breadth and depth of the measures exceeded market expectations—stoking fears of higher inflation and slower global growth from impending supply chain disruptions. Although capital initially rotated out of US equities and into international markets, broader risk aversion eventually swept across global markets.
US equities started Q1 2025 strong but quickly turned negative, led by a selloff in AI related stocks following the emergence of Chinese artificial intelligence company DeepSeek and then exacerbated by President Trump’s tariff plans….