In 2025, global financial markets have faced significant challenges largely fueled by President Donald Trumpโs escalating trade war. While a full-scale panic hasnโt taken hold, the major U.S. stock indexes are experiencing notable declines, prompting widespread concern. Prior to 2025, U.S. markets enjoyed two years of substantial growth, which led many to believe that stock prices were inflated. The trade war has exacerbated these fears, causing the S&P 500 to plummet over 12%, with U.S. markets lagging behind their European and Asian counterparts.
Investors typically seek refuge in traditional safe havens like U.S. Treasurys and the dollar, yet these assets have been behaving unpredictably. Recently, the dollar hit a three-year low, and U.S. Treasury yields have shot up. Under normal circumstances, yields would decrease as investors seek safe storage for their investments; however, Treasurys no longer offer the same security, disturbing their usual safe-haven status. Gold, however, continues to hold its value and reputation as a secure investment, with prices consistently reaching new highs.
Regarding the stock market, U.S. stocks are witnessing a sharp downturn after two years of impressive gains. The S&P 500 has already dropped 12.3% this year, a stark contrast to the more than 20% gains seen in both 2023 and 2024. The S&P 500 is now in a โcorrectionโ phase, having fallen over 10% from its peak in February. Alarmingly, only five weeks have ended on a positive note so far this year, and the index is nearing bear market territory, which is defined by a 20% decline from recent highs. This situation is even grimmer for the Nasdaq composite, focused on growth, as it has fallen almost 18%. Overseas markets, on the other hand, have managed to fare better than those in the U.S.
Bonds, typically perceived as a less risky part of the market, have also been unpredictable this year. The 10-year Treasury bond, which impacts mortgage and other loan rates, peaked at 4.80% in January before dropping, only to spike again after Trumpโs tariff plans were revealed in April. This bond yield surge, triggered when bond prices dip, is indicative of heightening fears about inflation and an impending recession. Treasury bonds function as IOUs from the U.S. government for funding, but the concurrent drop in stock and bond prices underscores deeper issues regarding trust in the U.S. as a safe investment choice.
Amid these tumultuous economic conditions, gold emerges as a shining exception, consistently climbing to unprecedented heights in 2025. Spot gold in New York reached a record high recently, closing at approximately $3,343 per Troy ounce, up nearly 27% from the beginning of the year. Gold futures also crossed $3,432 this past Monday. Gold tends to gain favor during uncertain times as investors turn to it for security, albeit some volatility persists. Following Trumpโs broad โLiberation Dayโ statement on April 2, spot gold decreased for three consecutive days but eventually rebounded strongly.
The U.S. dollar, known for being a global reserve currency, is struggling amidst the uncertainty surrounding tariffs, inflation, and the trajectory of the American economy. Within this year, the dollar has dramatically fallen by 9% against a mix of other currencies including the euro, yen, Canadian dollar, and Swiss franc. This decline started early in 2025 and has worsened over the recent months. A weaker dollar poses challenges for the U.S. government, businesses, and consumers by complicating borrowing at low rates, diminishing purchasing power, and threatening potential economic growth.
Concerning energy, there is a mix of positive and negative news regarding prices. A positive aspect is that as of Monday, U.S. gasoline prices averaged $3.15 per gallon, substantially lower than $3.67 at the same time last year. However, the downside is that falling energy prices typically signal an anticipated economic downturn, as reduced production, vacation cancellations, and cutbacks in business travel are likely. Oil prices have reached a four-year low this month, driven by fears over the effects of tariffs on global economic growth. West Texas Intermediate crude, a standard for the U.S., was trading around $62.40 per barrel on Monday, a 14% decrease year-to-date. Similarly, Brent crude, the European benchmark, hovered at just above $66, down nearly 13% since the start of 2025. Economic experts caution that the severe tariffs Trump advocates could lead to a recession with significant impacts on supply chains and energy sector employment.
Bitcoin, the leading cryptocurrency, remains highly volatile in 2025. It has experienced fluctuations throughout the year, peaking over $109,000 pre-Trumpโs inauguration in January before dipping below $75,000 amid widespread market declines. As of midday Monday, bitcoinโs trading value was above $87,000. Despite being $6,000 lower than its starting value this year, it remains considerably higher compared to recent years. Last year at this time, bitcoinโs value was around $65,000, and in April 2023, months after the downfall of FTX crushed the crypto scene, it was under $30,000. Trump, once skeptical of cryptocurrency, emerged as a strong supporter during his campaign and recently issued an executive order for a government bitcoin reserve.