February 2025 was an eventful month for financial markets, characterized by periods of strength and turbulence. The month began on a cautious note as markets reacted to escalating trade tensions, particularly the threat of new US tariffs on Canada, Mexico, and China. However, a temporary extension for Canada and Mexico provided relief, fueling a short-lived rally that pushed the S&P 500 to an all-time high on February 19.
Q1 2025 ended with stark divergence in regional performance, driven by geopolitics, policy surprises, and sector-specific risks. What began as a promising start to the year, supported by solid economic data and resilient consumer demand, shifted abruptly toward risk aversion.
June marked a turning point, but not because risks disappeared, but rather because investors stopped fearing them. Equity markets surged to new highs, not in spite of tariffs, fiscal strain, and geopolitical shocks, but because those threats proved manageable. The "wall of worry" is still standing, but markets are sprinting up it.
Markets in May were anything but quiet. What began with elevated anxiety fueled by escalating trade rhetoric and surging bond yields, quickly pivoted into a broad-based rally, as investors responded to a series of headline-driven shifts. At the center stood President Trump, whose abrupt softening on China tariffs and temporary delay of punitive measures against the EU triggered a powerful reversal in sentiment.
July did not break the trend, it tested its depth. After a record-setting first half, global markets entered a phase of quiet recalibration. The S&P 500 edged slightly higher, with leadership rotating out of mega-cap tech and into laggards such as utilities and industrials.
November interrupted the year’s steady advance, not with a decisive shift in fundamentals but with a bout of volatility that exposed the market’s growing sensitivity to policy expectations and valuation.
