Your January and February 2025 global market update

In 2024, investors enjoyed a “bull market”, with share prices rising overall during the course of the year.

Source: JP Morgan

In the new year, though, markets became more volatile. This is par for the course where investing is concerned, so if you noticed the value of your portfolio go down, there is no need to panic.

As you can see above, some indices grew promisingly in February and in the preceding year, while others experienced downturns or meagre growth.

Keep reading to discover the key events that contributed to these movements and other economic factors to consider.

UK

The FTSE All-Share experienced growth in February and in the year prior. This is great news for investors in UK equities. Schroders says that big businesses – healthcare, financial, and defence – were major contributors.

On the other hand, small- and medium-sized businesses continued to underperform amid worries about economic growth and inflation. In February, the Bank of England (BoE) revised its growth forecast for the year, and stated that inflation could climb to 3.7% temporarily. GDP growth has been waning for some time, and the latest Office for National Statistics (ONS) report says the economy declined in January. These conditions may potentially lead the UK into a period of stagflation, where inflation goes up but employment and economic growth stagnate or decline.

The chancellor will deliver her Spring Statement on 26 March. Stay tuned, as we’ll be publishing a full breakdown of the Statement on the day.

US

The inauguration of Donald Trump into the White House on 20 January has, naturally, caused both optimism and caution in investors, depending on how they feel about the president’s policy decisions.

In January, US markets held reasonably steady, but in February and early March some downswings occurred, partly due to confusion around the tariffs Trump plans to impose on Canada, Mexico, and China. Some experts have called this a “trade war” while others predict a recession will occur in the US.

According to the BBC, the president said there could be a “little disturbance” to the economy and markets while this new legislation comes into force. The report states that the chance of a US recession has increased from 15% to around 35% due to the tariffs.

Economic growth in the US remained reasonably strong in the last quarter of 2024, with the Bureau of Economic Analysis stating GDP grew by 2.3%. While figures for this quarter haven’t been released yet, any major trade decisions could have an impact.

It’s important to remember that despite some turbulence, remaining invested over the long term is usually the appropriate course of action. Discuss any major investment decisions with a professional.

Eurozone

Optimism around the potential for a ceasefire in Ukraine, and private sector growth, led the eurozone to perform well in February despite turbulence elsewhere.

Although Trump initially hinted at harsh tariffs for Europe when he was elected, the president’s focus on Canada, Mexico, and China may have prompted investors to turn their attention to Europe.

The eurozone has also experienced an incremental decline in the rate of inflation, with eurostat reporting the rate is expected to fall from 2.5% to 2.4% between January and February. So, the eurozone could continue to see positive change in the coming months, especially if worries around US markets push investors towards steadier regions.

Asia

While Japanese equities surged in 2023/24, they appear to be in a period of decline, with Schroders reporting that “weak performance in large-cap stocks, particularly in the technology and exporter sectors” is causing this.

In China, the release of DeepSeek prompted investors to flock to the region, seeing US artificial intelligence (AI) giant, Nvidia, lose $600 billion – the largest single-day dip in Wall Street history, CNBC says. On the other hand, as Brooks Macdonald pointed out in early March, inflation in China has “flatlined” and its economic conditions still prove problematic.

Plus, fears around Trump’s tariffs led to some caution around the entire Asia region in February, and this could continue as the legislation is rolled out.

Work with us to ensure your investments are managed with care

We believe that for investors, resisting the temptation to sell when markets become volatile is a crucial skill to learn.

Together with Brooks Macdonald, our discretionary fund managers, our financial planners can provide you with a bespoke plan that sets your investments on a path towards your goals. In a time of turbulence, it’s all the more important to take advice and resist succumbing to media noise and loss aversion.

Email enquiries@prosserknowles.co.uk or request a callback from one of our advisers.

Please note

This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.