Global markets continued their rebound in May, extending the recovery from April’s lows as consumer sentiment improved and trade tensions temporarily eased. Despite this progress, the broader economic outlook remains uncertain. Ongoing trade negotiations offer some hope, but the threat of higher tariffs looms if agreements aren’t reached.

The Q1 2025 Plan Universe Allocation & Return Analysis—the industry’s most granular analytics tool for plan sponsors, featuring data sourced directly from over 4,000 institutions—reported a relatively flat quarter for defined benefit plans. Notably, international equity markets delivered their strongest quarterly outperformance relative to domestic equities since Q2 2002.

Market volatility spiked to post-pandemic highs in early April, but a partial recovery followed the announcement of a 90-day pause on tariff hikes. Despite this, the U.S. market underperformed for the month. Among developed markets, the U.S. lagged behind peers like the UK and Europe.

The Confluence Preliminary Plan Universe Report – the industry’s most granular analytics tool for plan sponsors with data sourced directly from over 4,000 institutions – reported heightened volatility in Q1 2025, ending the quarter in negative territory as geopolitical tensions and tariff uncertainties weighed on investor sentiment.

The first quarter of 2025 introduced renewed volatility to both U.S. and global equity markets. Lingering economic uncertainty—combined with March's aggressive tariff announcements—reshaped investor psychology and rippled across regional factor trends.

February began with rising concerns over a potential global trade war, fuelled by threats of tariffs on U.S. imports from Canada and Mexico. U.S. equity markets showed mixed performance amid ongoing economic uncertainties and policy shifts, reflecting investor worries about potential tariffs and economic growth.

The Q4 2024 Confluence Plan Universe Report – the industry’s most granular analytics tool for plan sponsors with data sourced directly from over 4,000 institutions – reported another robust quarter for defined benefit plans. While U.S. Large-cap growth equity delivered another positive quarter for investors, a strengthening dollar negatively impacted non-U.S. equities.

The first month of 2025 saw strong returns in the equity markets, driving new all-time highs globally. Notable gains were in the United States and Eurozone. Factor trends have diverged from last year's patterns across all regions.