Monthly Market Review - March 2025
In March 2025, global markets declined amid growing concerns over impending tariffs and potential retaliatory measures. The MSCI World Islamic Index fell 3.3%, pulling its year-to-date (YTD) returns down to -3.5%, while the Dow Jones Sukuk Index gained 0.6% to reach a YTD return of 2.3%, amid mounting trade tensions and market uncertainty. Commodity markets mirrored the global mood, as investors sought refuge in safe-haven assets. Gold surged to a record high of $3,122 per ounce, driven by trade war concerns and heightened volatility.
In the U.S., equity markets faced headwinds from escalating trade tensions, which subdued investor optimism 1. President Donald Trump announced a 10% base tariff on all imports, with higher targeted duties on specific countries, marking some of the most substantial trade barriers in over a century. These measures aimed to address trade imbalances but raised widespread concerns about potential stagflation—a scenario characterized by stagnant growth coupled with rising inflation. However, economic signals were mixed: inflation moderated, with CPI easing to 2.8% year-over-year (YoY), offering relief against previous inflationary pressures. Despite this positive note, the Labor market showed minor strain, as unemployment edged up slightly to 4.1% from 4.0%. Additionally, manufacturing activity saw a noticeable cooling, with PMI dropping to 50.2 from the previous month's robust 52.7. Given these mixed signals, the Federal Reserve opted for prudence, maintaining current interest
rates and signalling patience as they closely monitored economic trends amid global uncertainties 2.
Across the Atlantic, the UK continues to face ongoing headwinds. Inflation showed signs of easing, falling to 2.8% YoY, but the manufacturing sector faced notable challenges, hitting a 17-month low with PMI declining sharply to 44.9 from 46.9. This downturn highlighted deeper structural issues, with pronounced reductions in output, new orders, and export business, suggesting persistent weaknesses amid uncertain global demand conditions.
Meanwhile, the Eurozone provided cautious optimism. Inflation slightly receded to 2.2%, down from 2.3%, easing some pressure on households and businesses. Encouragingly, manufacturing exhibited signs of moderate stabilization, as PMI improved to 48.6 from a low of 45.0 in September last year, driven by the first output increase in two years 3. The European Central Bank slashed rates again in March in anticipation of escalating trade tensions, and the markets are expecting another cut in April.
China’s economy presented a mixed picture in March. While deflationary pressures persisted, with CPI falling -0.7% year-over-year, the manufacturing sector showed signs of resilience. The PMI climbed to a 12-month high of 50.5, supported by stronger orders and rising production. These developments reflect China’s continued push to revitalize industrial activity amid ongoing deflationary challenges.
Looking ahead, markets are poised to remain highly reactive to geopolitical developments, trade policy shifts, and central bank actions. Investors are encouraged to maintain a diversified portfolio to manage potential volatility.
1 (Insider, 2025)
2 (System, 2025)
3 (Reuters, Euro zone factory activity shows signs of recovery in March, 2025)
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As with any investment, a Wahed Invest Ltd investment puts your money at risk, as the value of your investment can go down as well as up. The tax treatment of your investment will depend on your individual circumstances and may change in the future. If you are unsure about whether investing is right for you, please seek expert financial advice.
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