– Narendra Babu, Senior Director, Financial Marketing Services
Market Pulse
*All performances are in USD
Top Performing Asset Class:
Global Bonds (+2.9%): Global bonds showed strong performance in April 2025, signaling renewed investor confidence. A key driver was the decline in US Treasury yields, with 10-year yields falling below 4.2%, reflecting increased demand and boosting bond prices. This trend was supported by record trading volumes and multi-year low yields, as inflation cooled, and central banks adopted more dovish tones.
Worst Performing Asset Class:
Global Commodities (-8.8%): Global commodities experienced a sharp downturn and the slump is largely attributed to slowing global economic growth, ample oil supply, and rising trade tensions, all of which have weakened demand across key sectors. The decline poses serious challenges for commodity-exporting developing nations, with the World Bank cautioning that two-thirds of these economies may see stalled progress as a result of falling revenues and reduced investment.
1. April 2: President Donald Trump announced sweeping tariffs, including a 10% levy on all imported goods. This announcement, dubbed “Liberation Day,” triggered a massive sell- off across global markets.
2. April 3: U.S. Stock markets plunged, with the S&P 500 dropping 4.88%, Nasdaq falling 5.97% and the Dow Jones Industrial Average losing 3.98%.
3. April 4: The sell-off continued with the S&P 500 declining an additional 5.97%. The Dow Jones lost over 2,200 points, marking the largest point drop since COVID-19 pandemic.
4. April 4: Bond yields continued to rise, indicating growing concerns over inflation and economic instability.
5. April 10: Long term Treasury bonds faced significant selling pressure, and the U.S. Dollar weakened amidst the turmoil.
6. April 11: The university of Michigan Consumer Sentiment Index plunged to 50.8, marking the second lowest level sine records began in 1952, in response to the volatile trade policies.
Equities
Global markets experienced volatility due to escalating trade tensions and US tariffs. US markets initially plunged after tariff announcements by President Trump and China’s retaliation, sparking fears of a global trade war and recession. Panic selling led to a historic DOW drop, but markets rebounded mid-month as investors priced in the tariff impact and grew optimistic about negotiations, though indices still ended the month in red. European markets faced turbulence, initially declining sharply due to escalating US trade tariffs, but later partially recovering due to positive earnings reports and easing concerns over US automotive tariffs. The European Central Bank (ECB) reduced its key interest rates by 25 basis points. The UK’s FTSE 100 saw its sharpest single-day drop since March 2020 amid rising US tariffs and global trade war fears, but a 12-day rally driven by US tariff relief and progress in UK-US/EU trade talks helped trim losses. Asian equity markets exhibited varied performance. Chinese markets tumbled, with the Shanghai composite seeing its worst single-day drop since 2008 due to escalating US-China tariffs and trade war fears. Indian markets declined earlier in the month amid global trade tensions but rebounded later in the month on tariff relief news, and robust FII inflows, ending the month with gains, supported by the RBI reducing the repo rate by 25 basis points to 6%. Japanese markets fell due to US tariffs on cars and goods, raising concerns for the export- driven economy, however, optimism around trade negotiations helped Nikkei ending marginally higher.
Fixed Income
The Global Fixed Income market witnessed several defining moments in April as markets continued to remain volatile amidst geopolitical uncertainty as President Trump’s ‘Liberation Day’ tariff announcements led to heightened volatility and large risk asset declines. With the US Federal Reserve deciding to keep its rates unchanged as rising tariffs is expected to contribute towards higher inflation. By mid-month most tariffs were suspended for 90 days, bringing short- term relief to the bond market turbulence.
The European Central Bank (ECB) cut interest rates by 25bps as threat over economic growth looms from U.S. tariffs as many Asian central banks follow suite to cut rates to counter below average growth rate and recession threat. U.S Treasury yields rose due to escalating trade tensions, liquidity concerns among investors, and weaker U.S. GDP growth in the first quarter. Investment grade corporates softened, for the month, lagging similar-duration Treasuries. Similarly, Emerging Market bonds were slightly negative lagging similar duration treasuries. The U.S. 2-year treasury yield fell by more than 20 bps since March with the benchmark 10-year Treasury yield pulling back by about 5 basis points with investors being cautious over the latest tariff developments as President Trump negotiates on tariffs with trade partners. The 10-2 Year Treasury Yield spreads widened closing at 0.57%, as US growth slowed sharply amidst consumer and business sentiments decline over shifting trade policies. In the UK government bond yields have experienced fluctuations in April but ended lower due to various economic conditions, including inflation and interest rate changes. The uncertainty surrounding the evolution of US trade policy remains high and is likely to continue to feed market volatility ahead.
Foreign Exchange
April witnessed sharp currency movements across the globe, as the FX markets continued to be rattled by tariffs. Trump administration announced retaliatory tariffs at the beginning of the month on several countries, leading to a sliding US Dollar and a turmoil in the markets. While the dollar’s value declined amid rising uncertainties over the global trade situation, demand for other currencies as safe havens increased – the JPY appreciated c.5% against the USD. The BoJ remained cautious keeping rates on hold, citing tariff risks, while signaling possible hikes in the future depending on supporting domestic conditions. The Euro unexpectedly rose, by around 4.7% in April, following Trump’s tariffs announcements and Germany’s decision to increase defense spending. The GBP/USD pair fell at the end of April, primarily driven by a weak UK manufacturing PMI print and Trump’s confirmation not to remove Fed Chair Powell. The CNY weakened slightly by end-April, largely due to escalating US-China trade war and cautious domestic policies to support growth. Other Asian currencies remained firm, as the US- China trade war was aggressive during the month. The INR gained against the USD, as foreign outflows took a breather and a potential trade deal between US-India rendered optimism. Meanwhile, MXN and CAD remained under pressure on the back of USMCA renegotiations and growing concerns about the likelihood of a US recession.
Commodities
The performance of the commodity complex remained mixed in April with energy prices falling the most, followed by declining industrial metal prices. In contrast, precious metals performed well. Gold continued its upward trend last month with spot prices reaching yet another record high last month, following a broad sell-off seen in US stocks, bonds, and the dollar, driven by concerns about the US Federal Reserve’s independence. Exchange-traded fund (ETF) holdings in gold are at their highest levels since September 2023. Turning to industrial metals, LME copper prices fell by more than 5% MoM in April, primarily due to Trump’s escalating trade war continues to fuel concerns about global growth and the demand outlook for raw materials.
Turning to energy, and US natural gas turned out to be the biggest losers in the commodity complex, with front-month Henry Hub futures falling by more than 19% MoM in April following mild weather curbing demand and ample inventory availability. Meanwhile, crude oil also ended lower last month, as lingering tariff risks and expectations of OPEC+ loosening output curbs continue to add pressure.
Lastly, in agri commodities, sugar prices extended the weakness. They fell by more than 7% MoM in April, primarily on hopes of increased global production supported by favourable weather conditions in top producers – Brazil, and India.
Outlook
As we enter May, the global economy continues navigating a fragile recovery amid persistent geopolitical tensions and uneven monetary policy trajectories. The IMF has downgraded U.S. growth for 2025, primarily due to the impact of new tariffs and trade uncertainties. In Europe, growth remains sluggish, hindered by energy costs and fiscal constraints. The ECB maintains a cautious tightening path. China’s economic rebound is moderate, with mixed signals from manufacturing and property sectors. Policymakers are focusing on domestic demand and tech self-sufficiency to offset export volatility. Emerging markets face divergent outcomes; commodity exporters benefit from elevated prices, while import-reliant nations contend with currency pressures and debt servicing challenges. Global inflation is easing but remains above pre- pandemic levels in many regions, sustaining cautious central bank policies. Trade fragmentation and supply chain realignments continue shaping global commerce. Markets remain volatile, influenced by uncertainty around interest rate paths and geopolitical developments. Overall, the global outlook is one of the modest growths, tempered by structural shifts and geopolitical headwinds.
Central Bank Quotes
“Looking forward, the new Administration is in the process of implementing substantial policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation. Those policies are still evolving, and their effects on the economy remain highly uncertain. As we learn more, we will continue to update our assessment. The level of the tariff increases announced so far is significantly larger than anticipated. The same is likely to be true of the economic effects, which will include higher inflation and slower growth. Both survey- and market-based measures of near-term inflation expectations have moved up significantly, with survey participants pointing to tariffs. Survey measures of longer-term inflation expectations, for the most part, appear to remain well anchored; market-based breakeven continue to run close to 2 percent.”
– Jerome Powell, Chairman, Federal Reserve (16 April 2025)
“Most indicators of underlying inflation are pointing to a sustained return of inflation to our two per cent medium-term target. Domestic inflation has declined since the end of 2024. Wages are gradually moderating. In the last quarter of 2024 annual growth in compensation per employee stood at 4.1 per cent, down from 4.5 per cent in the previous quarter. Rising productivity also meant that unit labor costs grew more slowly. The ECB’s wage tracker and information from our contacts with companies point to a decline in wage growth in 2025, as also indicated in the March staff projections. Unit profits fell at an annual rate of 1.1 per cent at the end of last year, contributing to lower domestic inflation.”
– Christine Lagarde, President of the ECB (17 April 2025)
Market Indices*
*Indices are arranged in descending order based on their performance (% gains) during the period. Each colour refers to a specific index, and it remains constant for the table.
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What’s Ahead
| Date | Country | Event |
|---|---|---|
| May 15 | US | Producer Price Inflation MoM |
| May 20 | Canada | Inflation Rate YoY |
| May 21 | Japan | Balance of Trade |
| May 30 | Italy | Inflation Rate YoY |
| Jun 3 | Australia | RBA Meeting Minutes |
| Jun 5 | Euro Area | ECB Interest Rate Decision |
| Jun 10 | United Kingdom | Unemployment Rate |
| Jun 17 | Germany | ZEW Economic Sentiment Index |