OpenClose

Market Outlook

Environmental Solutions Outlook

Outlook
14 April 2025

By &

Latest Environmental Solutions outlook. 

clock

Equity markets have seen some very extreme moves as they try to make sense of the Trump administration's erratic tariff policy and its potential implications. The initial tariff proposals represented a major exogenous shock to the global economy and markets, being orders of magnitude larger than those announced in Trump’s first term. This remains the case with the subsequent proposal to further increase tariffs on China, whilst pausing implementation of the full extent of the initial proposals on the rest of the world. Clearly the situation remains fluid and can change very quickly. As such, at this stage it is difficult to accurately quantify the impact, partly because we do not know what the end point of tariffs will be, and partly because of the lack of any modern historical precedent for such an unorthodox policy shift. This uncertainty is exacerbating market volatility and increasing equity risk premia.

Key factors to monitor will be negotiation efforts with various countries, further retaliatory measures from China, as well as any monetary and fiscal easing. Beijing has already announced countermeasures, and is likely willing to take some pain rather than be seen to capitulate to Trump. As it demonstrated through its protracted Covid policies, China has a high threshold for such pain. It also has the ability to stimulate its economy to partially offset the impact of tariffs. With regard to monetary policy, markets began to price in a decidedly dovish response from the Fed, although this is far from certain given that tariffs are likely to increase inflation. On fiscal policy, Trump’s administration has talked of passing tax cuts this year to offset some of the tariff headwinds. There may also be further offsets to global consumers to the extent that slower growth results in a falling oil price and lower interest rates.

Environmental equities proved relatively resilient versus the broader market during the sell-off. This is perhaps unsurprising as environmental portfolios are by their very nature significantly underweight energy and metals & mining, sectors that are highly levered to global growth and at greater risk in an escalating tariff war. The universe is also home to some very high-quality companies that will tend to outperform during risk-off periods such as this. It is interesting to note that environmental equities were also relatively resilient during covid.


Important Information:

Nothing in this document constitutes or should be treated as investment advice or an offer to buy or sell any security or other investment. TT is authorised and regulated in the United Kingdom by the Financial Conduct Authority (FCA).

If you would like information on TT’s products, please contact:

Receive our insights

Sign up to receive regular investment updates and insight about products that interest you:

Sign up now