week ending 28th March 2025.

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.