April delivered a market rollercoaster that few saw coming. What began with economic aggression—via sweeping U.S. tariffs—ended with a social-media-driven policy U-turn that stabilized investor sentiment just enough to avoid a full-blown crisis.
A Month Defined by Whiplash
The month began with a bang as the White House imposed sweeping reciprocal tariffs, triggering sharp equity market sell-offs and the S&P 500 nearing bear market territory.
Investor sentiment deteriorated rapidly, and bond markets sent distress signals, with the 10-year U.S. Treasury yield spiking by 46 basis points in just one week. This surge reflected not just inflation fears, but growing concern that forced deleveraging among hedge funds was adding to instability.
Remarkably, it took just one Truth Social post from Trump and a hastily announced 90-day pause in tariff implementation to halt the decline. The market’s round trip underscored the fragility of confidence in a policy environment where decisions seem reactive rather than strategic.
International Markets Shine
Investors found relative refuge overseas. As the U.S. dollar weakened, European and emerging market equities outperformed thanks to more stable political environments and currency tailwinds. European indices saw strong gains, especially with the euro appreciating over 5% against the USD. In Asia and Latin America, markets rallied on the hopes that lower oil prices and the de-escalation of trade tensions could preserve growth. In contrast, Canada’s resource-heavy TSX remained flat as energy stocks declined and rate-sensitive sectors lagged.
Commodities & Currencies: Gold Soars, Oil Crashes
Gold gained 5.9% as investors sought safety amid geopolitical chaos, while oil plunged 17.1%—reflecting fears of slowing global trade. The U.S. dollar continued its sharp decline, enhancing the relative appeal of overseas investments.
Fixed Income: Volatility Creeps Back In
Canadian bonds lost ground (-0.8%), with long-term bonds hit hardest (-2.3%). U.S. Treasuries fared slightly better, but overall, fixed income felt the heat from yield spikes and increased uncertainty.
The Economic Outlook: Recession Risks Rise
Economic indicators continued to send mixed messages. The unemployment rate held steady at just above 4%, and job openings remained relatively strong. However, consumer and business sentiment surveys deteriorated sharply. With tariffs now acting as an indirect tax on both imports and exports, economic modeling by various analysts suggests a growing probability of recession. Indeed, betting markets now assign a 66% chance of a U.S. recession in 2025.
Inflation data, while elevated, remains far more controlled than the 2021–2022 surge. Central banks appear ready to act, but their capacity is constrained by the political unpredictability that has overtaken fiscal policy.
Final Thoughts
April showcased just how delicate the global financial ecosystem has become. A single policy misstep or poorly communicated initiative can now rattle global markets with unprecedented speed. While the tariff pause offers hope for continued recovery, valuation levels in the U.S. remain stretched, and further volatility cannot be ruled out. Investors should remain diversified, maintain adequate liquidity, and stay focused on long-term fundamentals. At Aisling Wealth, we continue to monitor these developments and adjust positioning with discipline and care.