In April, the European stock market saw a slight decline of 0.7%, while U.S. stocks also ended lower in euros, with the S&P 500 down by 5.4% and the Nasdaq down by 4.0%. Since the beginning of the year, U.S. stocks have been notably underperforming.
This April has been quite eventful, especially with the now-famous Liberation Day on April 2nd, which will be remembered as the day of “reciprocal tariffs”. The rates announced by the American President certainly took us by surprise. In addition to the base rate of 10%, there was an additional charge specific to each country, which we later realized was actually based on the trade surplus with the United States. Along the way, we also stumbled upon some amusing tidbits, like the fact that the McDonald Islands in Antarctica, which are home to just a few penguins, would also be affected by these tariffs.
The market, caught off guard and unsure of what to expect, experienced a significant shock upon learning about this bold measure aimed at reducing the United States’ trade deficit with the rest of the world. Within just a few days, major stock indices dropped by about 12%, and panic spread to the currency and bond markets. It was at this point that Trump, known for his ability to change direction in an instant, decided to ease tensions by postponing the proposed increases for 90 days for all countries except China, which had responded with its own countermeasures.
Since then, the stock market has rebounded significantly, recovering much of its previous losses. It’s likely that negotiations with allied countries (Japan, South Korea, the UK, and the European Union) are making headway behind the scenes and may eventually lead to a workable agreement for all parties involved. However, it’s almost certain that tariffs of at least 10% will remain in place for everyone.
This brings us to the tricky issue of China, which, in its quest to establish itself as a major power, has led to a surge in customs duties reaching astronomical levels of over 100%. As we write this, trade between China and the United States—the largest bilateral trade volume in the world, amounting to hundreds of billions of dollars—is essentially at a standstill. We’re even seeing cargo ships turning back off the coast of the United States.
The open-heart operation we are witnessing is still ongoing. It’s hard to predict how it will end, as there is a real risk of plunging the global economy into a deep recession by disrupting the global trade ecosystem. However, the worst-case scenario isn’t guaranteed, and this policy aims to address a long-standing structural imbalance: the American trade deficit. If this deficit improves in the coming quarters, it might not have all been in vain after all.
The performance of Clartan funds in April was mixed. The Valeurs fund decreased by 2.5%, the Europe fund by 0.3%, and the Flexible fund by 0.1%. On the other hand, the Patrimoine fund saw an increase of 0.4%, while the Ethos fund rose by 0.8%.