Issue link: https://info.seic.com/i/1537678
Executive Summary • Global trade tensions disrupted markets with tariffs beginning during the quarter and hitting Mexico, Canada, and China the hardest, while also affecting Japan and the European Union. Supply chain issues and inflation concerns further pressured the global economy and growth outlooks. • European equities extended their outperformance over U.S. stocks and expectations for ECB rate cuts strengthened. Lower valuations and improving economic data supported investor sentiment in Europe, while U.K. stocks remained attractive for diversification. • U.K. CPI inflation edged down to 2.8% in February from 3% in January, offering some relief to consumers and businesses. However, persistent cost pressures in services and wages kept the Bank of England cautious on the pace of future rate cuts. Economic Factors Interest Rates • Central banks remained cautious on interest rates; balancing inflation risks with growth concerns. The Federal Reserve and Bank of England held rates steady in March but signalled a more data-driven approach to future cuts, while the ECB cut by 25bps. Inflation • Global inflation slowed in the U.S., U.K., and Eurozone during the quarter. However, uncertainty arose due to expected short-term price increases from President Trump's tariffs, prompting the BOE to forecast higher inflation for the year. Economic Growth • Tariffs implications drove negative U.S. economic growth predictions, with GDP on pace to shrink by 1.5% over the quarter. In Europe, the ECB lowered its growth forecast for the Eurozone to 0.9% in 2025, while the Bank of England halved the U.K.'s 2025 growth forecast to 1%. Tactical Views Commodities • Commodities performed well during the quarter, serving as a safe haven amid geopolitical tensions and trade policy uncertainty, with gold reaching a record high. U.S. Large Cap Equities • U.S. technology stocks, specifically the Magnificent Seven, continued to decline during the quarter with a broader rotation towards stocks with lower valuations. SEI Quarterly Update. Q1 2025 This is a marketing communication Pessimistic Optimistic Pessimistic Optimistic Pessimistic Optimistic Pessimistic Optimistic Pessimistic Optimistic For use by advisers of regulated intermediaries in the UK in acceptance with all applicable laws and regulations Legend SEI's Current View: Direction of movement from previous: