Will tariffs and technology trigger more turbulence?
Monthly highlights, February 2025
Global equity markets have faced setbacks this year but have so far been resilient. Last month, DeepSeek, a low-cost Chinese artificial intelligence (AI) system, called into question the huge investments in more expensive American models. Shortly thereafter, President Trump raised the prospect of trade tariffs on Canada and Mexico and implemented new tariffs on China. Markets have rebounded quickly, with sentiment boosted by the strength of the US economy and continued optimism amongst companies and investors.
Although short-lived, these episodes highlight some of the key risks that investors still face in 2025. The US stock market has become highly dependent on the fortunes of a small number of technology companies and the development of AI, leaving little room for disappointment. Meanwhile, Trump's aggressive trade stance is very likely to cause more drama over the coming months. These challenges require a diversified, active investment approach that can protect portfolios during periods of volatility and take advantage of the opportunities it creates.
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Trump’s aggressive use of tariff threats is rattling markets. Our economists consider the possible impact.
THIS MONTH'S HIGHLIGHTS
While the impact of DeepSeek’s innovative approach to AI is yet to be fully understood, highly concentrated markets had become vulnerable to a pullback.
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In focus
Our investment team looks at what drove markets last year and the outlook for 2025. Watch the recording or read the summary.
These articles are issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.
This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.