Market headlines - equities struggling to gallop ahead

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

Key market events

📉 Stocks tumble amid tit-for-tat tariffs

• President Trump’s trade war is bringing more pain than champagne to markets. His threat of a 200% tariff on European beverages follows the EU’s proposal for a 50% tax on American whiskey, which came after the US imposed a 25% tariff on steel and aluminium imports.

🚫 Ukraine ceasefire talks

• The US and Russian presidents are set to discuss the proposal for a 30-day ceasefire in Ukraine. This follows meetings between US Special Envoy Steve Witkoff and Russia's President Putin.

✈️ US CPI drops to 2.8%

• US stocks briefly rebounded as inflation was lower than expected in February, largely driven by a sharp drop in airline prices.

🏇 UK GDP falls at the first hurdle 

• The UK economy shrank in January by 0.1%, dragged down by a sharp drop in manufacturing sectors.

💰 US set to avoid government shutdown

• Senate Democratic leader Chuck Schumer signalled his intent yesterday to vote for the Republican spending package, likely avoiding a government shutdown. But the drama continues, with Elon Musk’s cost-cutting campaign through the Department of Government Efficiency (DOGE) still a point of contention.

President Trump may claim he’s not focused on the stock market, but the stock market is certainly focused on him - and his escalating trade war. The constant back-and-forth of tariff proposals across multiple regions is rattling investor confidence, with capital moving from risk assets to the safe havens of bonds and gold.

US equities are feeling the heat more than other regions, with investors pulling back from what’s long been their favourite global market. The dollar has also fallen compared to other currencies in recent weeks, as economic expectations cool. While the US GDP was boosted in prior years by the significant fiscal spending from the Inflation Reduction Act, markets are concerned a potential reversal will be triggered by DOGE’s cost-cutting measures. In contrast, European governments appear to be taking off their fiscal handbrakes to support increased military spending.

If there’s one thing markets dislike, it’s uncertainty. And right now, that uncertainty – coupled with fears over the economic damage tarffis can inflict – is at the heart of this week’s widespread sell-off.

Chart of the week - states of uncertainty

Source: Pantheon Macroeconomics, March 2025.

The chart above tracks the Baker, Bloom and Davis daily economic policy uncertainty indices for the US and UK. Whilst both have generally trended upwards since last summer - reflecting a growing sense of economic uncertainty - we’re now seeing a significant divergence.  US economic policy uncertainty has soared higher this year, while the UK’s uncertainty has been more contained.

This shift is having a direct impact on market performance. The US stock market has struggled this year, while the UK, European, and Chinese equities have managed to push forward.

The big question is how far President Trump will go with his tariff crusade, and for how long? Will a time come when he'll have to look at the stock market and reverse course? While the US midterms aren’t until next November, the campaigns and narratives will begin to form far before then. Trump may soon feel the pressure to take a more market-friendly approach, which could improve investor confidence.

FTSE falters

• US stocks are feeling the pressure from trade tensions, weak economic data, and disappointing corporate earnings reports. However, homebuilder stocks got a boost from new planning reforms, offering some optimism. 

S&P correction

• The US index has officially entered correction territory- defined as dropping more than 10% from its recent peak. The tech-heavy Nasdaq has fallen even further back, down over 14% from its latest record high. 

China Securities Index (CSI) high

• Onshore Chinese equities hit their highest level of the year after the government announced measures to help support consumer spending. 

Oil slips

• The ongoing uncertainty from tariffs and weak Chinese inflation data have led to oil prices falling back to their lowest levels since December. 

Flight to safety

• Gold charges through $3,000 for the first time, with investors placing their bets on the safe-haven asset.

Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 13th March 2025.

Stay tuned for next week’s market insights

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