Overview
In April 2025, global financial markets experienced a significant turbulence, primarily driven by geopolitical developments and economic policy shifts. The announcement of sweeping tariffs by US President Donald Trump on April 2, dubbed “Liberation Day”, triggered a global stock markets free fall, with major indices like the S&P 500, Nasdaq, and Dow Jones experiencing substantial declines. The ensuing trade tensions, particularly between the US and China, led to retaliatory measures, further exacerbating market volatility. Investors grew increasingly concerned about the potential for US recession and stagflation—a combination of rising inflation and slowing economic growth. The heightened uncertainty surrounding international trade policies contributed to a cautious investment climate and dampened economic growth projections worldwide.
Looking at the performance of major asset classes in April 2025, in response to a significant surge in market volatilities and fears gauge, investors responded by shifting towards safer assets, resulting in increased demand for bonds and a notable decline in Treasury yields. However, DJ sukuk index gained 0.66% as yields softened later in the month. Additionally, the U.S. dollar weakened, where GBP appreciated 3.09% against USD, and gold prices saw further gains (+5.06%) as market participants sought stability amid the uncertainty. However, DJ commodity index tumbled 5.8% amid significant decline in crude oil prices (-11.7%). In Europe, after experiencing an increased volatility, stock markets were buoyed later in the month by optimism over potential US-China trade talks, with indices like the FTSE 100 and Euronext 100 ended the month with a modest loss of 1.26% and 3.5%, respectively. The S&P 500 index and DJ Islamic markets index lost 1.06% and 0.35%, respectively. In Asia, China’s Shanghai index lost 2.1% while Japan’s Nikkei index gained 1.2% in April. Overall, April was marked by heightened volatility, driven by geopolitical tensions and shifting investor sentiment. The following snapshot provides a detailed breakdown of the performance of different asset classes in April 2025 and year-to-date
Market Snapshot
News & Key Events in April
UK
• The annual inflation rate in the UK slowed to 2.6% in March 2025 from 2.8% in February and below market and the BoE’s forecasts of 2.7%.
• The British economy expanded 0.1% on quarter in Q4 2024, the same as in the first estimate, and following a flat reading in Q3.
• The United Kingdom’s unemployment rate held steady at 4.4% from December to February 2025, unchanged for the fourth consecutive period and in line with expectations.
US
• The annual inflation rate in the US eased for a second consecutive month to 2.4% in March 2025, the lowest since September, down from 2.8% in February, and below forecasts of 2.6%.
• Fed policymakers expected inflation to be pushed higher this year due to the impact of elevated tariffs, though they acknowledged considerable uncertainty around the magnitude and persistence of these effects, minutes from the last FOMC meeting in March 2025 showed.
• The U.S. economy contracted at an annualized rate of 0.3% in the first quarter of 2025, marking the first decline since the first quarter of 2022. This was a sharp reversal from 2.4% growth in the previous quarter and came in below market expectations of 0.3% growth, according to an advance estimate.
• The University of Michigan consumer sentiment for the US was revised higher to 52.2 in April 2025 from a preliminary reading of 50.8, and compared to 57 in March. Despite the upward revision, consumer sentiment fell for a fourth consecutive month to the lowest since July 2022, as consumers perceived risks to multiple aspects of the economy, in large part due to ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming ahead.
• On April 30, 2025, the United States and Ukraine signed a deal granting the U.S. access to Ukraine’s natural resources in exchange for financial and military assistance. This agreement aims to establish a joint investment fund to support Ukraine’s reconstruction after the ongoing war with Russia.
Europe
• Consumer price inflation in the Euro Area remained steady at 2.2% in April 2025, slightly exceeding market expectations of 2.1% and hovering just above the European Central Bank’s 2.0% target midpoint, according to a preliminary estimate.
• The ECB cut all three of its key interest rates by 25 basis points, lowering the main refinancing rate to 2.40%, the deposit rate to 2.25% and the marginal lending facility to 2.65%, as expected.
• The Gross Domestic Product (GDP) In the Euro Area expanded 0.40 percent in the first quarter of 2025 over the previous quarter.
China
• China’s consumer prices fell by 0.1% year-on-year in March 2025, missing market expectations of a 0.1% increase and marking the second consecutive month of drop, as the ongoing trade dispute with the U.S. threatens to exert further downward pressure on prices.
• The People’s Bank of China (PBoC) left its key lending rates unchanged for the sixth consecutive month in April, aligning with market expectations as the central bank waits to assess the evolving impact of U.S. trade disputes before introducing further stimulus.
• The Chinese GDP grew by a seasonally adjusted 1.2% in Q1 of 2025, slowing from a 1.6% rise in Q4 and falling short of the market consensus of 1.4%. It marked the softest quarterly expansion since Q2 of 2024 while representing the 11th consecutive quarter of advance.
Others
• Japan’s annual inflation rate edged to 3.6% in March 2025 from 3.7% in the prior month, marking the lowest print since last November.
• The annual inflation rate in Canada fell to 2.3% in March of 2025 from eight-month high of 2.6% in the previous month, below market expectations that it would remain at 2.6% and below forecasts by the central bank of 2.5%.
• The Bank of Canada held its benchmark interest rate unchanged at 2.75% in its April 2025 decision, as expected by half of the market, to mark the first hold following 2.25 percentage points of cuts in seven consecutive decisions.
• The annual inflation rate in Russia rose to 10.3% in March of 2025, the fifth consecutive increase to the highest level since base effects from Russia’s invasion of Ukraine kicked in in February 2023.
• The Bank of Russia kept its key interest rate unchanged at a record high of 21% on April 25th 2025, aligning with market expectations.
• Bitcoin surged roughly 15% in April to end the month at $94500 per token. However, it is still trading significantly below $108,786, its highest price level achieved in January 2025 amid Donald Trump backing.
Disclaimer
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