Weekly Market Review: 14th April 2025

In the US, market sentiment was transfixed on trade and tariffs. The retaliation from China in the form of tariffs led to tit-for-tat measures between the US and China, with an effective US rate of 134.7% on Chinese products. Equity markets responded negatively, weighed down by escalating concerns over the global economic outlook amid the intensifying trade war, which now appears fully underway. While China has retaliated, many countries have opted to negotiate with the US, such as Japan, South Korea, and Vietnam, who are heavily reliant on the United States as an export market. Markets also feared a spike in inflation, even as pressure mounts on the Federal Reserve to intervene and cut US interest rates. As stocks declined, investors abruptly sold off US Treasuries – with this sell-off in Bonds so unsettling that it spooked the White House. President Trump announced on Wednesday evening all countries, with the exception of China, will now be subject to a 10% tariff rate with the US for the next 90 days. Markets rebounded strongly after the announcement, with $4.3tn being added on Wednesday evening alone in stock market value. In corporate news, Microsoft cancelled plans to build a $1bn data centre in Ohio, with rising costs associated with tariffs speculated to be the reason. In economics, US inflation slowed to 2.4% in March, the lowest rate since September and below forecasts of 2.6%. This positive news on inflation was however lost, with global trade and alarmed bond and equity markets taking centre stage For the week, the S&P 500 closed 10.47% higher, while the NASDAQ closed 12.57% higher.

In Europe, equity markets began last week with steep declines, as the potential impact of 20% reciprocal tariffs on the EU and the prospect of a wider trade war between the EU and the US sending markets into freefall. This was until Wednesday evening, when President Trump announced his 90-day pause on additional tariffs. EU markets surged as a result on Thursday morning, with the STOXX 600 having its best day since March 2020, at the height of the Covid pandemic and central bank interventions. It now means the US tariffs on the EU will remain at 10%, on top of 25% tariffs for automotives, steel and aluminium. While not yet announced, tariffs on pharmaceutical products are also expected. For the week, the EuroStoxx50 and STOXX 600 closed higher, up 5.01% and 4.43% respectively.

In the UK, the FTSE 100 tracked the peaks and troughs of markets last week, gaining 4.5% on Thursday morning. However, the decline and subsequent rebound were less pronounced than in Europe or the United States, as the UK had initially been subject to a 10% tariff by the US, with further negotiations anticipated. UK monthly GDP data for February showed the economy expanded by 0.5%, beating estimates of 0.1%. For the week, the FTSE 100 closed 4.38% higher.