Market Commentary and Outlook – March 2025

Global Market Performance

U.S. equity markets continued to decline in March, extending the downward trajectory observed in February. The persistent weakness was largely driven by investor concerns surrounding the newly announced U.S. tariffs, which have intensified uncertainty across sectors.

During March 2025, the Dow Jones index declined 4.1%, the S&P 500 fell 5.6%, and the Nasdaq Composite experienced a more pronounced correction, dropping 8.1%. In contrast, international markets were comparatively stable: Developed EAFE markets fell 0.3%, while Emerging Markets managed a modest gain of 0.7%.

From a sector perspective, performance was mostly negative. Only Energy and Utilities posted gains in March, reflecting a rotation into more defensive areas of the market. The most significant underperformance came from Consumer Discretionary and Technology, each declining 8.3%, highlighting their sensitivity to trade-related headwinds. Communication Services also lagged, down 5.2%.

During the first quarter of 2025, the Dow Jones index declined 0.9%, the S&P 500 fell 4.3%, and the Nasdaq Composite experienced a more pronounced correction, dropping 10.3%. international equities outperformed their U.S. counterparts. Developed markets, as measured by the EAFE Index, advanced a solid 7.0%, while Emerging Markets posted a respectable 3.0% gain, reflecting relative resilience in global risk appetite and diversified regional performance.

Gold continued its upward momentum in March, surging 10.2% to close the month at a record $3,122.67 per ounce. The rally reflects ongoing investor demand for safe-haven assets amid heightened macroeconomic uncertainty.

Oil prices trended lower during the same period. Brent crude declined 1.1% to $73.96 per barrel.

In digital assets, major cryptocurrencies faced renewed selling pressure. Bitcoin declined 2.78%, ending March at $84,709.14—down 11.1% year-to-date and 22.4% below its all-time high, underscoring continued volatility in the crypto space.

In fixed income, bond markets were relatively muted. The U.S. yield curve remained largely unchanged across durations, resulting in mixed fund performance. Notably, the Vanguard Short-Term Bond Index Fund ETF (BSV) outperformed peers, while the iShares 20+ Year Treasury Bond ETF (TLT) declined 1.2% for the month.

The U.S. inflation rate moderated in February, holding steady at 2.82% after briefly touching 3.0% for the first time since May 2024. Core inflation eased slightly, declining from 3.26% in January to 3.12%, suggesting a continued—though gradual—disinflationary trend.

At its March 19th meeting, the Federal Reserve held its benchmark Fed Funds Rate within the current 4.25%–4.50% target range, as expected. According to the CME FedWatch Tool, markets widely anticipate the Fed will maintain this stance at its upcoming May 7th meeting, marking a third consecutive pause in rate adjustments amid ongoing assessment of inflation dynamics and economic activity.

Market Outlook

On April 2, 2025, President Trump invoked emergency powers to implement a 10% universal tariff and additional reciprocal tariffs of 15–49% on imports from 180 countries with trade surpluses against the U.S., effective April 5. These tariffs are larger than market expectations triggering another market sell-off on April 3rd. However, many goods are excluded from the reciprocal tariff including steel/aluminum and auto/auto parts already subjected to Section 232 tariffs, copper, pharmaceuticals, semiconductors, lumber, bullions, and energy and minerals that are not available in the US. Also, Canada and Mexico are not affected by this new order, meaning USMCA compliant goods will continue to see 0% tariff.

In our view, this move marks the beginning of US’ negotiation strategy aimed at securing more concessions from its trading partners. In the near term, higher tariffs will likely create supply-side pressures, pushing up consumer prices and compressing corporate margins. However, the proceeds of these tariff (estimated at $700bn / year) could be used to reduce US’ huge national debt (~$36 Tr or >$100,000 per person) and to pay for future tax cut for these same consumers and corporations. Strategically, the tariffs are also intended to bolster US domestic manufacturing and national resilience in critical sectors such as automobile, semiconductors, batteries, bio-manufacturing, and shipbuilding. 

Amid elevated geopolitical and policy uncertainty, investors should expect sustained volatility and should focus on diversification, liquidity, and flexibility to navigate evolving market dynamics for the rest of 2025.