What's been moving financial markets?

Financial markets experienced heightened volatility coming into the spring months as wide-ranging US tariffs were announced. Since then, the investing backdrop has steadied somewhat, with the direction for global trade starting to become slightly clearer. However, a level of uncertainty remains. This page is where we are keeping investors up to speed with key developments and our investment team's views.

When financial markets experience a spike in volatility, as we saw in April, there can be an overwhelming amount of information on what's happening and why. For investors, it can be challenging to know where to look for the information most relevant to you.

Below, we share what we've been keeping a close eye on in recent months, and how this has fed into the portfolio decisions we have made on behalf of our clients.

It takes a rolling commentary format, with the newest update from our team at the top.

Past performance and forecasts are not a reliable indicator of future performance. We do not provide investment advice in these updates. Always do your own research.

15.05.25

Q1 2025 corporate earnings season in the US has delivered strong results, with companies focused on managing costs to shore up profits.

Recently, tariff-related uncertainty has caused concerns for businesses as they digest the wide-ranging implications for their supply chains. However, the profits of large US corporates remained resilient in Q1, even with the possibility of tariffs on the horizon over the period.

Corporate profits, also known as earnings, are one of the many indicators of the health of the economy and big businesses that our investment team uses to inform the allocation of assets in Nutmeg portfolios.

Over 90% of the 500 large US companies that comprise the S&P 500 index have now reported their earnings for the first quarter of the year. Average earnings growth came in at over 12%.

In contrast, there has been a more modest increase in sales growth. Therefore, the substantial jump in earnings growth has been driven by companies managing costs carefully in order to support their profitability.

"Business survey data have weakened this year on the dramatic changes sought by President Trump. Despite the sentiment slump, companies remain in control of their balance sheets and profit and loss statements. The other positive for business is the still-solid reports on demand for goods, services and labour. We remain of the view that economic recession is not the most likely outcome for 2025 or 2026 and that this should support company profitability going forward."

Bradley Holland, Director of Investment Strategy

For more information on corporate earnings:

Background reading: What is earnings season?

Deeper dive: Why do company earnings matter for investors?

05.05.25

April was an action-packed month for financial markets, with higher-than-normal volatility.

There were steep, tariff-related falls for many asset classes at the start of the month, something we have outlined in previous entries to this article over the course of April. What we then saw in the latter half of the month, which may not have grabbed everyone's attention to the same extent, was a fairly sustained recovery for many financial markets. Multiple asset classes ended up finishing April around where they started it. For example, the S&P 500 (which reflects the performance of the 500 largest US companies) was down -0.7%, while UK government bonds were up 1.7%.

We expect trade headlines to ebb and flow as countries negotiate with the US, and the US administration updates its approach, and equity markets may continue to react to that news flow.

Pacome Breton, Head of Portfolio Management, reflects on the month and outlines how we are positioning portfolios in our May investor update, available below.

02.05.25

This week, Nutmeg Portfolio Manager, Bola Onifade, looks back over the first 100 days of the new Republican administration, analysing what kind of precedent it may have set for the remainder of the term.

“Investors will be feeling bruised after a period of volatility and turbulence over the past 100 days. The main US equity indices, the S&P500 and Nasdaq, thrived during the transition period but have shrunk back since inauguration day. Technology leaders have also had their valuations cut, with some of their supply chains now being tested after the tariff announcements.

“On the other side of the coin, asset classes and sectors with defensive qualities have been less impacted and even flourished over this period of flux. For example, as inflation fears have risen, the share prices of non-discretionary consumer staples have benefited across the UK, Europe, and US. This period reminds us that money often doesn’t leave the market but instead migrates to other places.

“The last 100 days present plenty of lessons and learnings for investors. The remarkable nature of how quickly policies have been announced, changed, accelerated, or ditched has further generated uncertainty and volatility. For investors like us, this highlights the importance of building resilient portfolios that can weather periods of volatility and benefit from a global strategic asset allocation. By having broad exposure to asset classes and geographies, portfolio performance can potentially be cushioned when there are losses in one asset class.”

Negotiations are key to outlook in second half of 2025

“Looking ahead, it is impossible to ignore the potential impact of tariffs and the clear shift in perceptions around the US economy and its future. With that said, there are dangers of giving in to short-term narratives in a fast-changing world. Several fundamentals of the world’s largest economy’s recent exceptionalism – low unemployment, a resilient consumer, and a relatively closed economy – still remain true today."

25.04.25

It is too early to read much into comments from the US Treasury that the trade standoff between the US and China might de-escalate, but perhaps it's a sign that relations may start to thaw.

The Nutmeg investment team has previously made mention of this Republican administration’s use of uncertainty. Specifically, our view is that it necessitates that investors do not take statements from the White House fully at face value, to which the last few days stand testimony.

We first made this comment shortly after the so-called 'Liberation Day' tariff announcements on 2 April. Only days later, the US government announced a 90-day pause on most reciprocal tariffs, with the notable exception of China. Within the past few days, signs have emerged that the US government could relax its tough stance on trade with China too.

US Treasury Secretary, Scott Bessent, commented on Wednesday that tariff rates between China and the US are “not sustainable”. Investors interpreted the statement as a move towards de-escalation, and the mood in US equities briefly lifted. However, the Treasury Secretary also commented that the final state of US tariffs would not be known until the third quarter of the year. China itself has asserted no negotiations have begun, and that no solution can be expected until the US revokes the "unilateral" tariffs targeting it.

In a similar vein, within the past week, the US president has been deeply critical of the Federal Reserve Chair, Jerome Powell, before seeming to row back on the comments after they unnerved markets.

So, while it appears there have been steps in the right direction this week, we expect a few more twists in this story yet.

18.04.25

Over the last three weeks, 10-year US Treasuries – a key pillar of the bond markets – have seen as much as a 0.50% difference between their lowest and highest yield readings.

Typically, an asset class such as US Treasury bonds acts as a 'safe haven', where investors flock amid times of economic uncertainty. This can see the prices of lower risk bonds like these rise when equity prices are falling.

In recent weeks, against the volatile equity market environment, we have also seen bond yields and prices move around sharply. Investors have been grappling with the implications of tariffs for the direction of inflation and interest rates, key influences for the bond markets.

The quick change in the yield on the 10-year US Treasury mentioned above may not sound like a lot, but for what is regarded as a stable asset, it is noticeable. It can help to explain why portfolios invested in what would typically be regarded as lower risk investments have also seen higher-than-normal levels of volatility.

Yields are now back around the same level they were before the tariff-induced swings, and seem to be stabilising somewhat after the initial shock. We expect bonds to continue to play an important role in all but the highest risk multi-asset portfolios, as they have done for investors in previous periods of market turbulence.

13.04.25

The US has granted exclusions from the tariffs announced on 2 April for smartphones, computers and select electronics.

The 'reciprocal' tariffs, including the baseline tariff of 10% and the heightened levies on imports from China, have been waived on a broad array of electronic items, and backdated to 5 April. This offers some pause on concerns that technology prices for US importers could skyrocket, given China's major role in the production of electronics.

09.04.25

On 9 April, the US President announced a 90-day pause on higher tariffs for trading partners, other than China.

This means that the tariff paid by US importers on goods from most countries will be the baseline rate of 10%. This excludes China, where tensions with the US remain heightened. The pause has been welcomed with market gains, however the "end-game" is still to play out and is subject to uncertainty.

08.04.25

The asset allocation of the Smart Alpha portfolios – on which J.P. Morgan Asset Management advises Nutmeg on the management of – was adjusted on 8 April 2025.

Portfolios' exposure to equities was reduced, in particular US equities. Some of this equity exposure was shifted into fixed income to hedge against a potential growth slowdown.

This reflects a growing caution regarding the US economic outlook, with the magnitude of the announcement of US tariffs being much higher than anticipated by the market, and far outstripping those promised during the election campaign. The bars on the right side of the chart below reflect the full extent of the tariff surprise, which markets have been reacting to.

Jon Sherman, Head of US Equities at J.P Morgan Asset Management, adds context to this chart, explaining on 9 April that ‘the magnitude of the “Liberation Day” tariffs announcement was much higher than anyone anticipated, and certainly higher than we thought in our US equity business.’

Read more from the J.P. Morgan Asset Management market insights team: US tariffs: what to do and what not to do, in light of tariff news

04.04.25

2 April saw the US' sweeping tariffs come into effect.

The wholesale nature of the tariff regime announced is more than almost all expectations, posing increased downside risks to economic and global trade activity. Confidence shocks are likely negative in the near term so we are now looking at a slightly lower growth and slightly higher inflation outlook than had been widely expected.

Our investment team made a number of portfolio adjustments on 4 April to reduce risk in Nutmeg's managed portfolios. These are based on the team's rigorous and ongoing analysis. To see full details of the trading activity relevant to your portfolio, please access the 'Discover' section of the app and see 'Trading Updates'.

We started this page in April. Below we have included a summary of our views and decisions in the months leading up to this, informed by our analysis of the evolving macro-economic data and global financial and geopolitical announcements.

01.04.25

March saw US equity performance weaken significantly, while major stock markets in the UK and Europe showed resilience but still declined.

Tariff noise overshadowed significant economic events, including:

The UK Chancellor's Spring Statement, which highlighted the Office for Budget Responsibility's – the government's financial watchdog – warning of worsening economic growth
Germany's approval of a substantial infrastructure spending plan, with changes to debt rules for increased defence spending
Early signs of a possible resolution to the Ukraine conflict
Optimism about Japan's potential escape from deflation.

In the Fully Managed and Thematic Investing portfolios, Germany's fiscal boost from the infrastructure spending plan provided a tailwind to our equity holdings in European industrial companies. However, along with the broader European equity market, prices fell back in late March as investors became concerned about the potential for greater risk that could be coming with the looming tariff announcement.

27.03.25

The US President has suggested that tariffs are a strategy to encourage goods production to move back to the US. The Nutmeg investment team is monitoring changing policy announcements carefully.

We believe that, while tariffs are a 'supply shock' (where the supply of goods/services is restricted artificially), the current threats, while unsettling, are likely to have a limited inflationary impact. This is due to the US' relatively low level of imports compared to peers.

We appreciate the uncertainty tariffs create for Federal Reserve policymakers, who may need to adjust interest rate strategies.

While the global economy is expected to grow moderately, supporting US and global stock markets, extreme tariff measures could lead to adverse market conditions.

11.03.25

Markets have been rattled by the US Republican administration's evolving rhetoric on tariffs.

Financial markets have been more unsettled in recent weeks, with US equities at the centre of the volatility. Investors’ uncertainty has risen, as it remains unclear which of the administration’s intentions will translate into action, and to what extent.

Although the recent weakness in the US market is noticeable, we believe that the long-term picture is still positive for risky assets. US equities had an especially strong year in 2024, with the S&P 500 up 25.8%. The US can’t always outperform every month, every quarter. The long-term view remains largely positive, despite price fluctuations, which are a reflection of a functioning market.

Importantly, Nutmeg portfolios are globally diversified – geographically and by asset class. This is done to limit the impact of volatility in certain regions on overall portfolio performance.

04.03.25

February saw varied performance in global financial markets, with US equities reaching new highs in the middle of the month.

The Nutmeg investment team remains optimistic about the US economy based on ongoing evidence of strong manufacturing activity, healthy consumption, and a robust labour market.

We adjusted our portfolios by adding positions in the US financials sector, anticipating benefits from steady economic growth, elevated interest rates, and potential deregulation under the new Republican administration.

Additionally, we maintain a neutral stance on European stocks but favour specific sectors like industrials, driven by evidence of rising global trade and potential increases in European defence spending, while also preferring Nordic markets for their brighter macroeconomic outlook.

04.02.25

In January, global equities saw gains, with UK equities performing particularly well. Delayed decisions on tariffs kept investors guessing: the start of what we expect to be a recurring theme of unpredictability.

We expect this to introduce a level of uncertainty in markets, which we anticipate will create regular opportunities for engaged investors. At Nutmeg, we aim to keep a long-term perspective and look beyond short-term 'noise' generated by unpredictable comments or actions. That said, the durable impact of proposed tariffs can’t be neglected, given the potential ramifications for the US and world economies.

07.01.24

In December, there was a little cold water poured on investors' optimism by the Federal Reserve – the US central bank.

Central banks have been cutting rates to help boost economic growth. However, inflation in the US has remained stubbornly above target. The Fed is concerned that if they cut rates too much too quickly, it could bring unwanted upward price pressures. In terms of the investment environment, we acknowledge that there are challenges and a degree of caution is warranted, with US equity valuations above historic averages. We could see increased market volatility. However, we remain optimistic about the broad investing landscape, and expect the corporate earnings picture to remain positive.

12.12.24

Our outlook for 2025: optimistic, but cautious about geopolitical uncertainty.

We outline that a number of major planned political events, ongoing geopolitical conflicts, and a new Republican administration in the US could increase the potential for market volatility in 2025.

We believe that the US economy is still robust relative to other geographies, while the UK also appears to be in relatively good shape. The possibility of tariffs at the levels currently proposed by the incoming US administration, and possible counter-tariffs by China, is likely to unsettle emerging markets overall.

Risk warning  

As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest. Past performance and forecasts are not a reliable indicator of future performance. We do not provide investment advice in this update. Always do your own research.