Market update

Since the US announced tariffs against a number of key trading partners on 2 April, investors have been dealing with an environment of uncertainty. In the space of two weeks, we’ve seen retaliation, negotiation and even pauses to many of the tariffs.

But volatility goes both ways – it could be positive as well as negative and may create opportunities. We’ve seen markets rise over the past two weeks as well as fall. 

Even though markets have experienced some turbulence, the US economy – the largest in the world – still appears healthy over the long term. Unemployment is low, wages are rising and consumers are still spending their money. All good signs for the economy. 

The impact tariffs have on the US economy could influence how its central bank – the US Federal Reserve (Fed) – manages interest rates.  Tariffs could cause prices to go up, but currently, US inflation remains at a relatively comfortable level of 2.4% for the year to March.

This means the Fed has some leeway to cut interest rates should the economy begin to weaken. And if that happens, it could be good for share prices as lower interest rates tend to encourage people to spend and lower company borrowing costs.

Closer to home, at the time of writing, the Bank of England look set to reduce rates when they next meet on 8 May.

Market volatility can be uncomfortable, but it’s a normal part of investing. As long-term investors, we analyse long-term data, and the future still currently looks positive for investors in our view.

Research from the team found that missing out on the 20 best days of performance in global stocks could see your potential yearly returns nearly halve. That’s why we have not made any sudden changes but stuck to our investment process. We continue to assess what regions and sectors could produce the best returns over time. 

Diversification remains central to our investment approach. By investing across various types of assets, regions and sectors, diversification could help absorb any short-term volatility. It could also help capture any positive performance if one area recovers sooner or quicker than others. 

Our funds also don’t just focus on dampening any market falls. Investing involves taking risk and so it’s important to look for opportunities that could add value to your investments.