week ending 28th March 2025.

As shown in the accompanying table, it was a broadly negative week for global financial markets.

US markets struggled this week, with major indices closing lower as investors reacted to a combination of persistent inflation data and ongoing trade policy concerns.

The week started on a cautiously optimistic note, with markets hoping for a more measured approach from the Trump administration on tariffs. However, sentiment shifted midweek after President Trump announced new import taxes of 25% on cars and car parts entering the US, set to take effect on 2 April. Charges on businesses importing vehicles are expected to begin on 3 April, with taxes on parts due to start in May or later. Following the announcement, automaker stocks worldwide took a hit. It’s important to remember, however, that these tariffs are still subject to negotiations. The tariffs are expected to increase car prices in the US and disrupt supply chains. As we’ve seen before, Trump often lets deadlines pass, providing additional time for further discussions.

In Europe, stocks ended the week lower, with the STOXX Europe 600 down 1.4% following Trump’s tariff announcement. While the threat of such tariffs had largely been priced into the market, the news particularly impacted German manufacturers due to their significant reliance on US exports. Despite the market dip, there were some bright spots. The eurozone private sector expanded for the third consecutive month, and Germany’s business sentiment reached its highest level since mid-2024. On the geopolitical front, hopes for a partial ceasefire between Russia and Ukraine also brought some stability to the region.

In Japan, markets followed a similar pattern. The Nikkei 225 fell 1.48%, with Japanese automakers suffering from concerns over US tariffs. However, Japan’s government is actively pursuing an exemption, with Prime Minister Shigeru Ishiba emphasising that all options remain on the table to protect the country’s key auto sector.

US inflation data also weighed on US markets towards the end of the week. The Fed’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) index, rose 0.4% in February, pushing the annual rate to 2.8%, well above the Fed’s 2% target. This release comes as investors have been closely monitoring data for signs of how President Trump’s tariff policies are affecting the economy. On a more positive note, business activity picked up in March. The Composite PMI rose to 53.5, indicating growth in the services sector, although the survey noted that many firms expressed concern about customer demand and the impact of policies.

The ‘my wealth invest’ app will be available to clients who hold investments with my wealth, which is a trading name of Wealth at Work Limited, part of the Wealth at Work group.

The UK’s FTSE 100 outperformed its European peers, managing to close the week marginally higher. British carmakers are meeting with the government to discuss how best to respond to US auto tariffs, with UK officials trying to negotiate lower levies before the deadline. There was also positive news that boosted investor sentiment: UK retail sales rose by 1% month-on-month in February 2025, defying expectations of a 0.3% decline, following a downwardly revised 1.4% gain in the previous month.

Despite these challenges, it’s important to remember that tariffs are not final. Negotiations are ongoing, and exemptions remain a possibility. While markets may be reacting to near-term uncertainty, areas of strength—such as business activity growth—can provide a buffer. As always, focusing on the bigger picture can help investors navigate volatility. We may see continued market volatility in the coming week as investors focus on April 2, a date U.S. President Donald Trump has labelled “Liberation Day.” Further fluctuations are likely, depending on the specifics of the developments on that day. However, our portfolios remain highly diversified, providing protection against market swings and ensuring stability, even in uncertain times. Our expert investment team is closely monitoring market conditions and is ready to seize any opportunities that may arise.

Looking ahead to next week, keep an eye on Chinese PMI, Eurozone inflation data, US ISM PMI, and US unemployment data towards the end of the week.

Kate Mimnagh, Portfolio Economist