Investment market commentary
Commentary by Anne O’Doherty, Head of Life & Pensions
The first quarter of 2025 concluded against a backdrop which saw global markets experiencing notable turbulence, influenced by evolving trade policies, geopolitical tensions, and shifting economic dynamics but a relatively stable Irish market. Despite the challenges, certain sectors have shown resilience with others facing ongoing uncertainties.
Ireland: Current Economic Landscape
The Irish economy continues to exhibit robust growth, bolstered by strong export performance and moderated inflationary pressures. As of March 2025, the Consumer Price Index (CPI) reflects a stable inflation rate, aided by declining energy costs and targeted government interventions and the ECB base rate remained at 3.25%, However, the housing market continues to remain a critical concern, with the most recent housing reports highlighting persistent issues most notably the ongoing supply constraints. The House Price Index continued to trend upwards. Measures introduced in the 2024 Budget aimed to alleviate these issues and while no change is yet visible it is hoped that the impact will be felt later in the year.
The Irish stock market has shown resilience amid global volatility, particularly within the technology and pharmaceutical sectors, which continue to attract strong investor confidence. Conversely, the retail and service sectors face headwinds due to subdued consumer sentiment. While political developments dominated the end of 2024, once government formation completed at the start of this quarter, political factors did not continue to influence the economic outlook to as much of an extent.
Global Market Developments
The first quarter of 2025 was marked by significant market fluctuations, largely driven by trade policy shifts. U.S. President Donald Trump’s announcement of comprehensive reciprocal tariffs has introduced uncertainty, impacting investor confidence and contributing to market volatility. We witnessed a market decline which I feel reflects investor apprehension as to what is coming down the tracks.
Interesting however is that in contrast, European markets continued to demonstrate reasonable strength. China continued to face challenges with growth projections tempered by trade tensions and structureal issued but measures are being put in place to mitigate these challenges.
Looking Ahead
At the time of writing significant and wide-ranging US trade tariffs have now been announced. This has had an immediate negative impact on the market and we have witnessed indexes plunge overnight. This is going to have the single most concerning impact on market behaviour and returns over the next 12 months. But Central Bank policies and inflation trajectories will also remain pivotal factors influencing market dynamics. Globally, divergent economic trends may present opportunities for investors with diversified portfolios.
Despite the most recent events and the ongoing uncertainties these and other factors bring to the table, we maintain an optimistic outlook for long-term investment prospects. The key as we always discuss with our clients is to ensure you have a well-diversified portfolio and a clear investment strategy and most importantly stay the course.
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