21 April 2025 Economic Overview - By efpc
April saw the continuation of the turbulence experienced in the first quarter of 2025, as markets grappled with a fresh wave of geopolitical and macro-economic developments. The most significant catalyst came early in the month with the implementation of sweeping United States (US) tariffs on “Liberation Day”. A 10% baseline tariff was imposed on all imports, alongside additional levies targeting specific countries including China, the European Union and South Africa, to name just a few. These measures triggered immediate retaliatory responses, most notably from China, escalating the trade war and sending equity markets into a sharp sell-off. The VIX, a widely used measure of implied volatility, spiked to its highest level since the onset of the COVID-19 pandemic in 2020. While a late-month announcement from President Donald Trump (pausing the implementation of reciprocal tariffs for 90 days) helped stocks to recover some ground, the damage to sentiment was already done as major indices closed April in negative territory. Chinese equities bore the burnt, decreasing 4.3% for the month, while the S&P 500 only declined 0.7%, significantly recovering from its peak intra-month decline of 11.6%. Developed regions were overall fairly muted by the end of the month.
Locally, South African markets faced extreme levels of volatility during April, rattled by both global and domestic pressures. The US’ 30% levy on South African exports triggered a sharp sell-off, while political uncertainty intensified as disagreements within the Government of National Unity over the proposed 0.5% value-added tax (VAT) hike continued to erode investor confidence. The Johannesburg Stock Exchange recorded an R1 trillion single-day loss during the height of the turmoil. Sentiment, however, sharply improved late in the month after the VAT hike was scrapped and the US paused its tariffs for 90 days, restoring a sense of stability. South African listed property posted a standout return of 7.6%, followed by South African equities with 4.3% as risk appetite cautiously returned.