Global equity markets, as measured by the MSCI ACWI Index, posted modest losses for the first quarter of 2025. Positive performance in most global markets was offset by a downturn in the U.S. attributable to concerns about the impact of tariffs on imported goods imposed by the administration of President Donald Trump. During the quarter, U.S. stocks, as measured by the MSCI USA Index, underperformed their European counterparts, as represented by the MSCI Europe Index, by the largest margin in more than 30 years (in U.S. dollar terms).¹ Furthermore, the U.S. broad-market S&P 500 Index and the tech-heavy Nasdaq Composite Index recorded their largest quarterly losses since the third and second quarters of 2022, respectively.²

Emerging markets garnered positive returns and outperformed their developed-market counterparts during the first quarter. 

Eastern Europe led the emerging markets for the quarter attributable largely to strength in Poland and the Czech Republic. The Jordan + Egypt + Morocco market also performed well. The Association of Southeast Asian Nations (ASEAN) region recorded a negative return due mainly to weakness in Thailand and Indonesia. Europe was the top performer among the developed markets due mainly to strength in Spain, Italy, and Ireland.  European stocks rose on the prospect of higher defense spending from the European Union after a controversial Oval Office meeting over military aid between U.S. President Donald Trump, U.S. Vice President J.D. Vance, and Ukrainian President Volodymyr Zelenskyy at the end of February. European shares retreated later in March after the Trump administration announced tariffs of passenger vehicles, light trucks, and parts built outside of the U.S. Additionally, the Nordic countries benefited from significant market rallies in Norway, Sweden, and Finland.³

On February 3, a day before 25% across-the-board tariffs on Mexico and Canada (with an exception for Canadian energy, which faces a 10% duty) were scheduled to be implemented, the Trump administration reached agreements with Canada and Mexico to delay the levies for 30 days. This was only after Mexico agreed to send 10,000 troops to the border to combat the flow of fentanyl into the U.S., and Canada pledged to appoint a fentanyl czar, list cartels as terrorists, and launch a joint strike force with the U.S. to combat organized crime, fentanyl trafficking, and money laundering. 

After the 25% tariffs on Canadian and Mexican imports took effect on March 4, the leaders of the respective countries announced plans to levy retaliatory tariffs on U.S. imports. In late March, the Trump administration announced 25% tariffs on passenger vehicles, light trucks, and parts built outside of the U.S. The administration also revealed its plan to impose reciprocal tariffs (which seek to match the levies that other countries impose on U.S. goods) on imports from countries that are the largest contributors to the U.S. trade deficit. Additionally, on April 2, Trump announced that the U.S. will impose 10% tariffs on imported goods from all U.S. trading partners, and significantly higher levies on countries that the administration believes have unfriendly trade policies. The tariffs were scheduled to be implemented on April 5. The ongoing tariff dispute remains highly volatile and in constant flux. 

Global fixed-income assets, as measured by the Bloomberg Global Aggregate Bond Index, gained 2.6% for the quarter. Mortgage-backed securities (MBS) and U.S. Treasury securities were the strongest performers within the U.S. fixed-income market, while investment-grade corporate bonds and high-yield bonds recorded negative returns. Yields moved lower across the curve during the quarter. Yields on 2-, 3-, 5-, and 10-year Treasury notes fell by corresponding margins of 0.36%, 0.38%, 0.42%, and 0.35% to 3.89%, 3.89%, 3.96%, and 4.23%, respectively.⁴ The decline in the yield on the 10-year Treasury resulted in a slightly inverted yield curve (three-month yields exceeded 10-year yields), which historically has predicted economic recessions. 

Global commodity prices, as represented by the Bloomberg Commodity Index, increased 8.9% in the first quarter. A sharp rise in late March due to concerns regarding supply amid geopolitical tensions in the Middle East lifted the Brent crude oil price to a 0.2% uptick for the quarter to $74.77. The West Texas Intermediate (WTI) oil price also rallied, but ended the quarter with a small decline of 0.3% to $71.48. Oil prices had moved lower earlier in the quarter in response to an impending ramp-up in oil production by the Organization of the Petroleum Exporting Countries (OPEC) in April. The gold price reached multiple record highs over the quarter, climbing 19.3% as investors sought safe-haven assets amid concerns about the Trump administration’s proposed tariffs, as well as a decline in the U.S. dollar. (The gold price typically moves inversely to the greenback.) The New York Mercantile Exchange (NYMEX) natural gas price surged 33.0% during the quarter as cold winter weather in the U.S. spurred an increase in demand. Wheat prices fell 2.6% during the quarter in response to a proposed ceasefire in the Russia-Ukraine war, which raised concerns about increased supply. The wheat price also was hampered by strong production from Australia and Argentina, as well as reduced imports from China.  

On the geopolitical front, the Trump administration sought to enter into negotiations to end the Russia-Ukraine conflict after the president spoke with Russian President Vladimir Putin. Trump subsequently extended an invitation to Ukrainian President Volodymyr Zelenskyy to participate in negotiations with Putin for a ceasefire in the war. In late March, the Trump administration announced that Russia had agreed to a limited 30-day ceasefire in the conflict. Soon thereafter, however, Russian President Vladimir Putin demanded several conditions for the truce, including Ukraine’s withdrawal from four regions in the country that Russia had annexed illegally in October 2022—but has not occupied—as well as the reduction of a North Atlantic Treaty Organization (NATO) military presence near Russia’s borders. 

Elsewhere, in mid-March, the U.S. launched a military strike against the Houthis, an Iran-backed militant group that seized Sanaa, Yemen’s capital, in 2014. The Houthis have continually attacked numerous commercial ships sailing through the Bab el-Mandeb, the strait connecting the Gulf of Aden to the Red Sea and the Suez Canal. According to a spokesperson for the U.S. Department of Defense, the airstrikes hit more than 30 Houthi targets, including “terrorist training sites, unmanned aerial vehicle infrastructure, weapons manufacturing capabilities, and weapons storage facilities.”

¹ Source: Forbes, “European Stocks Surge Ahead Of S&P 500 In Q1 2025.”  31 March 2025. 

² According to The Wall Street Journal. 31 March 2025. 

³ All equity market performance statements are based on the MSCI  ACWI Index.

⁴ According to the U.S. Department of the Treasury. As of 31 March 2025.

All references to performance are in US dollar terms unless otherwise noted. See Standardised Performance for more information. 

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