Eben Visser

The first quarter of 2025 brings a cautious tone as Donald Trump re-enters the presidency, introducing new geopolitical and economic uncertainties. His administration’s early policies and rhetoric are already influencing market sentiment, particularly regarding foreign relations and fiscal priorities.

The Federal Reserve has signalled a slower pace of rate cuts, citing persistent inflationary pressures and the need to assess the long-term economic effects of the Trump administration’s policies. This shift comes after a period of aggressive monetary easing, raising concerns about tightening financial conditions and their impact on growth.

Investor sensitivity to information remains elevated, as evidenced by recent market reactions. The abrupt selloff in response to perceived valuation risks suggests investors are cautious of current market prices and that new information will leave assets subjected to high volatility. Q1 2025 has the potential to set the scene for expectations of the year – the market has both the capacity to continue its momentum as well as slow down and wait for earnings to catch up to valuations.