Equities were off to a challenging start in the first quarter of 2025 as the global equity market declined -1.6% as measured by the MSCI All Country World IMI Index. Global markets were dragged down by the US as the Russell 3000 Index returned -4.7% and the so-called Magnificent 7 trailed the market. Weaker US returns contrasted with the country’s recent stock market dominance and the positive performance of non-US markets during the first quarter.
Developed and emerging markets were both up as the MSCI World ex USA IMI Index returned 5.8%, and the MSCI Emerging Markets IMI Index returned 1.7%, highlighting the benefits of global diversification. A new administration in Washington commanded global investors’ attention, and markets quickly reacted to ongoing threats of tariffs and retaliation.
Energy stocks lead in the US while tech stocks like Nvidia and Tesla saw declines. While global markets reacted to news from Washington, some countries like China and Mexico led US returns by double digits notwithstanding threats of tariffs. Global inflation remained stubborn in January and February, leaving upcoming central bank rate cuts in question. FOMC participants revised their 2025 target rate expectations higher. Globally, value stocks outperformed growth stocks, while both the small cap and profitability premiums were negative.
1. The Magnificent 7 stocks include Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla.
Past performance is no guarantee of future results.
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