Issue link: https://info.seic.com/i/1540524
A Year In The Markets. Q4 2024 Donald Trump elected US President again in stunning political resurrection. Why is it news? Four years after leaving the White House, Donald Trump has been given a second chance by millions of American voters and is now the 47th President of the United States. His re-election follows a tumultuous period, including surviving two assassination attempts and a criminal conviction. Does it really matter? In this new Trump era, expectations include aggressive international trade tariffs, stringent immigration policies, and significant tax cuts. These policies could potentially lead to higher inflation and interest rates. The Federal Reserve may need to tread cautiously when cutting interest rates, despite potential pressure from the White House. Q1 2025 US tariffs shake global trade, sparking economic uncertainty. Why is it news? The US ramped up tariffs in early 2025, reigniting global trade tensions and unsettling markets. These measures signal a shift toward economic protectionism, with potential consequences for global supply chains, inflation, and geopolitical stability. Does it really matter? Higher tariffs could drive up consumer prices, disrupt international trade, and strain diplomatic relations. If global economies retaliate, it may slow economic growth and add uncertainty to an already fragile post-pandemic recovery. Q2 2025 June strikes between Israel and Iran fuel fears of direct conflict. Why is it news? The strikes mark a major escalation in Middle East tensions with potential global repercussions (supply chains, oil, broader conflict). Israel's airstrikes on Iranian military sites, followed by US attacks on nuclear facilities, raised fears of a broader regional conflict. The risk to global energy supply routes, particularly through the Strait of Hormuz, has pushed geopolitical risk sharply higher. Does it really matter? Markets have remained calm, suggesting confidence that the Trump-brokered ceasefire will hold. While risks persist, we see a major escalation as unlikely. Iran cannot disrupt regional oil exports without also threatening its own. Iran is also unlikely to jeopardise its relationship with China, a key strategic partner and major buyer of Middle Eastern oil. Q3 2025 The US central bank cut interest rates by 0.25%. Why is it news? This marked the first US rate cut since Jan 2024. The central bank made the move to support the economy amidst pressure from the White House and signs that the jobs market was slowing, even though inflation remains above target. This move signals a strategic pivot, prioritising employment over inflation control in the near term. Does it really matter? Lower rates generally make borrowing cheaper, which can stimulate economic activity, boosting share prices and benefitting investors. This cut helped markets rally beyond the big tech names into smaller companies and emerging markets. However, if inflation rises again or job growth stays weak, markets could become more volatile. Source: SEI IMU 3