After a stormy week, markets regained some composure on Tuesday, though some ended the day on a subdued note. A sizeable rally followed the opening bell, sparked by signs that the U.S. might enter negotiations to reduce tariffs on key trading partners. That optimism fuelled massive gains across global markets, with the FTSE 100 and Eurostoxx 50 both closing up around 2.7%, and U.S. indices surging at the open—the S&P 500 and Nasdaq rising as much as 4% and 4.5%, respectively. But the rally unravelled as the White House confirmed it would move forward with significant tariffs on China, including an additional 84% in levies across all imports, bringing the total to at least 104%. As the first round of previously announced tariffs came into effect around midnight with no signs of moderation, caution returned, and U.S. markets closed the day lower.
While dramatic headlines and sensational news stories continue to dominate, we encourage clients, as always, to hold their nerve and remain committed to their long-term investment strategies. Our investment management team is working diligently behind the scenes, focusing on market and economic fundamentals. By looking beyond the short-term noise, we’re committed to ensuring your portfolios are positioned for long-term success and to identifying opportunities to capitalise on market dips along the way.
Tariffs aren’t the only talking point for markets this week – even if they have stolen the spotlight.
U.S. jobs data released on Friday showed that 228,000 jobs were added in March—well above expectations—underscoring the continued resilience of the U.S. economy despite ongoing uncertainty around President Trump’s policies, including tariffs and federal workforce cuts. While momentum remains steady for now, market participants are beginning to price in a potential slowdown in the labour market in the coming months, as higher taxes and supply chain disruptions could start to weigh on growth. On Friday, Fed Chair, Jerome Powell, acknowledged that the U.S. may face slower growth and rising inflation in the quarters ahead—factors that could complicate the Fed’s ability to lower interest rates at its next meeting in June. Markets are currently expecting a rate cut at that time.
Retail sales in the Eurozone climbed by 2.3% year-on-year in February, up from a revised 1.8% increase in January, according to figures published by Eurostat on Monday. A closer look at the data reveals slight gains across the major categories of food and beverages. At the same time that retail sales were gaining momentum, fresh data showed a slight cooling in industrial producer prices across the Euro Area. In February 2025, prices inched up just 0.2% from the previous month, a slowdown from January’s upwardly revised 0.7% increase.
The key question now is whether this latest data strengthens the case for the European Central Bank (‘ECB’) to hold off on further interest rate cuts at their next meeting, or if they’ll opt to continue easing. While consumer spending has shown a modest rebound and inflationary pressures appear to be softening, policymakers must also weigh the risks of an escalating trade war with the U.S.—a threat that could derail the Eurozone’s fragile recovery. Although earlier hopes for fiscal stimulus briefly lifted the outlook for growth and inflation, these measures will take time to fully materialise. In the meantime, concerns over sluggish growth are likely to dominate, and markets have already priced in further rate cuts by the ECB.
Still to come this week we have Fed meeting minutes, China’s PPI and CPI, US CPI and UK GDP.
Nicola Tune, Portfolio Specialist
