Market headlines - Liberation Day shakes global trade

Stay up to date with the latest market trends, economic shifts and key financial developments across the UK, US and Asia.

Key market events

💰 Trump unleashes mass tariffs 

• Trump announced blanket tariffs on all exports into the US, starting at 10% for allies like the UK, and surging over 50% for countries with large trade surpluses, including China and the EU. 

❄️ Eurozone inflation cools off 

• Annual inflation fell below expectations to 2.2% in March, led by falling energy prices. 

🔃 Signs of a Chinese rebound 

• Manufacturing Purchasing Managers’ Index (PMI) rose to 50.5 in March, marking a second consecutive month of expansion - a sign that China’s economy may be on the road to recovery. 

🏠 UK house prices stalled ahead of tax hike

• While house prices rose 3.9% year-on-year, monthly data showed no growth in March as buyers rushed to complete before April’s stamp duty increases. 

🤝 Musk’s AI startup buys X (Twitter) for $33bn

• Elon Musk’s artificial intelligence (AI) company, xAI, purchased his social media platform for $33bn (plus debt) in a bid to improve efficiency and benefit from data sharing for AI development.

The US implemented wide ranging tariffs – branded ‘Liberation Day’ by Trump - across countries deemed both friends and foes. The rates themselves were higher than many had anticipated, and global markets were rattled by the news and fears of recession were reignited. Despite hopes of an exemption, the UK was also included on this list and was slapped with a 10% levy on all exports to the US. However, this rate was below the 20% tariff placed on the EU, and significantly less than the 54% tariffs placed on China. The market’s sharp reaction reflects real concern: Will this trigger a global trade war - or lead to a quick resolution?

Next comes the threat of escalations and countermeasures - with the EU already hinting at retaliation.

However, markets are hoping that such a negative economic reaction will prompt fast negotiations between the US and its trading partners, leading to a climb down or elimination of rates.

As ever, we continue to monitor the situation carefully as events unfold to help advisers and clients navigate the shifting landscape.

Chart of the week - Performance of the S&P 500 after 10% corrections

Source: Apollo; Bloomberg, 28th March 2025

Earlier this year the S&P 500 dipped more than 10% of its value, entering correction territory. The chart above highlights how similar market corrections have historically played out - with and without a recession – shedding light on potential return paths ahead.

The US economy is approaching a critical inflection point. Previously encouraging economic data now faces the prospect of quickly deteriorating in light of this week’s tariff announcements, possible counter-tariffs, and the subsequent hit to corporate earnings.

Over the next few months, whether we see a resolution or an escalation in global trade tensions will be key to determining the market’s direction. For investors and advisers, understanding this backdrop will be essential in positioning portfolios for either recovery - or further downside risk.

Global markets fall as US tariffs hit

• In the US the S&P 500 fell by its largest single-day decline since the Covid pandemic, as sectors such as banks, autos, and retailers expect big falls in demand. The NASDAQ also fell heavily in the week as many tech-supply chains are highly reliant on Chinese imports.

Europe follows suit 

• Losses extended to Europe as most national markets, including the FTSE, fell. Internationally reliant sectors such as banking and luxury goods took the heaviest hits, while defence and utilities provided some resilience.

Asia hit by export fears

• A similar story was seen in Asia - both the Nikkei and Hang Seng declined as investor sentiment faltered. Japan’s export-driven economy and China’s exposure to steep new tariffs left markets under pressure.

Commodities under pressure

• Oil prices have slumped due to rising supply and concerns about slowing global demand. Gold, however, edged higher - one of the few assets to benefit from its traditional safe-haven appeal.

Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 3rd April 2025.

Stay tuned for next week’s market insights

For more market updates sign up to our CPD-accredited Let's Talk Markets webinars. 

This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.