Обзор инвестиционной среды, 04/2025

In April, global equity markets experienced volatility levels unseen since the onset of the COVID-19 crisis in March 2020, following the Trump administration’s announcement of new “reciprocal” tariffs on the so named “Liberation Day” of April 2. The initial reaction was extreme: within two days major global equity indexes recorded double-digit percentage losses, with U.S. markets alone erasing approximately USD 5.4 trillion in value.

The most dramatic sell-off came on April 4, when the Nasdaq-100 plunged 6.1% and the S&P 500 fell 6%. By the end of what came to be known as “Liberation Week” the Nasdaq-100 had fallen 9.8%, while the S&P 500 recorded a 9.6% decline. European and Chinese indexes saw similar damages: the STOXX 600 lost 7%, the DAX declined 6.9%, while the Shanghai Composite and CSI 300 fell 7.3% and 7%, respectively.

Tariff relief sparks rebound, but April ends mixed

Market sentiment shifted on April 9, when the Trump administration announced a 90-day postponement of the tariff rollout (excluding China). This, combined with stronger-than-expected U.S. Q1 2025 corporate earnings, sparked a rebound in global equity markets. On that day alone, the S&P 500 surged 9.5%, marking its best single-day performance since October 2008, while the Nasdaq-100 soared 12.1%, its strongest gain since January 2001.

By month-end, most global equity indexes had nearly recovered to their pre-announcement levels. However, performance varied across regions. The S&P 500 closed April down 1.1%, the Dow Jones declined 3.1%, and the Russell 2000 fell 2.4%, while the Nasdaq-100 posted a gain of 0.7%, positively impacted by strong tech earnings. In Europe, the STOXX 600 dropped 2.3%, and the DAX remained flat. Chinese equities were under severe pressure, as Beijing received no tariff reprieve: the CSI 300 ended the month down 3.0%, and the Shanghai Composite declined 2.1%, further strained by signs of domestic economic slowdown. Amid the market chaos, Bitcoin rebounded strongly, gaining 14.6% MoM to close just above USD 95 000.

An overall strong earnings season despite major uncertainty

Amid growing concerns over a potential recession and economic slowdown, U.S. companies largely exceeded expectations in their Q1 earnings. Notably, the tech sector showed resilience, particularly in AI-related areas. As of early May, 72% of S&P 500 companies have posted their Q1 2025 results, with 76% of those exceeding EPS estimates and 62% exceeding revenue expectations, and the YoY earnings growth rate for the index is currently at 12.8%.

Sector performance in earnings growth has shown a clear divide between defensive and cyclical industries. Leading the charge was health care, which saw a remarkable 61.1% earnings growth, followed by communication services at 27.5% and IT at 16.9%. However, cyclical sectors faced significant challenges. Industrials experienced a 29.2% earnings decline, impacted by weaker demand for capital goods and rising tariff-related costs. Energy earnings contracted by 27%, largely due to falling oil prices and weaker refining margins. Meanwhile, consumer discretionary saw a 14.4% drop, driven by reduced consumer spending and inventory imbalances.

Asia rolls out new stimulus measures in response to tariffs

Several Asian countries have already rolled out new stimulus measures in response to the new reality of the global trade environment. South Korea announced two major support packages over the month to bolster key industries. On April 9, it introduced an emergency package for the automotive sector, which included increasing policy financing to 15 trillion won (USD 10.18b), cutting the automobile purchase tax from 5% to 3.5% until June 2025, and expanding electric vehicle subsidies to cover 30–80% of price discounts.

In Japan, the government rolled out a package on April 25 that includes a 10 yen per liter reduction in gasoline prices, partial compensation for electricity bills over three months starting in July, and expanded access to low-interest loans for small and medium-sized enterprises, with The Japan Finance Corporation pledging to double its credit lines to 10 trillion yen (USD 70b) by 2026.

Meanwhile, in early May the People’s Bank of China (PBOC), introduced further monetary easing policies, including reducing the seven-day reverse repo rate by 10 basis points to 1.4%, cutting the benchmark lending rate by 25 basis points, and lowering the reserve requirement ratio for banks by 50 basis points, releasing approximately 1 trillion yuan (USD 137.6b). The package is aimed at boosting lending and addressing challenges in the property sector.

Recession fears slightly ease

The Eurozone’s manufacturing sector continued to contract over the month as new orders shrank amid decline in exports. The services sector reached contraction territory after four consecutive months of growth, with the revised PMI decreasing from 51.0 in March to 50.1 in April. Inflation in the Eurozone remained steady for April at 2.2% YoY. The U.S. manufacturing sector was weak too, with the ISM PMI declining to 48.7 in April from 49.0 in March. The services sector remained over the contraction threshold and unexpectedly increased to 51.6 in April compared to 50.8 in March due to an influx of new orders and the growth of inventories. According to the Bureau of Labor Statistics, the U.S. economy added 177 000 jobs in April, indicating that the labor market is still going strong despite economic and recessionary concerns. The gold import adjusted Atlanta Fed’s GDP estimate for Q2 2025 is currently standing at 2.2%, increasing from 1.1% in earlier in the month and reflecting easing tariff concerns in the second quarter of the year, indicating that the economy might not slip into recession by the end of the quarter.

On April 17, the ECB reduced its deposit and repo rate by 25 basis points to 2.25%, and 2.40% respectively, marking its seventh cut in a year, as it responded to weakening growth and disinflationary pressures. On May 7, the Fed held rates at 4.25%–4.50% for the third time, citing inflation and job market risks, with Powell favoring a cautious and data-driven approach for further decisions. The U.S. 10-year Treasury yield reached a low of 3.99% on April 4, before easing to 4.18% by the end of the month, while German 10-year Bund yield dropped from around 2.68% on April 9 to about 2.44%.

Dollar surrenders; precious metals and oil in danger zone

EUR/USD pair had another very strong and directional month, as prices smashed 1.1200-1.1300 resistance level and were close to a 1.1550 mark. We have mentioned multiple times how 1.1200-1.1300 resistance zone is critical, and since it has been broken, it now becomes an important area of support. Overall, there is still a decent chance of dollar strengthening, but we certainly recommend hedging USD positions here.

Oil finally dropped to 60 dollars per barrel support level, and small long positions could be worth trying, since we overall like the exposure on commodities and energy sector. There is a lot of uproar about “someone” lowering oil prices for various reasons, and recently Saudi Arabia started to threaten to stop supporting oil prices as some OPEC members are not sticking to the set rules. Still, we would rather keep watching price behavior and cut off the media noise. Yes, possible recession is the factor that could put more pressure on prices, but should the market rise above 65-67 USD/bbl. levels then this would be the first sign of oil bottoming out.

Gold still ‘shines’ in uncharted territory and keeps posting new all-time highs, as market turbulence causes fear, and yet we keep reducing our longs to our long-term minimal levels. Silver had a volatile month (acting more like an industrial metal, which it partly is) with fast drops and recoveries, still lacking momentum or any decent spark. Again, please adhere to strict risk management rules, as precious metals are known for big price fluctuations and long consolidation periods.