Stay up to date with the latest market trends, economic shifts and key financial developments across the UK, US and Asia.
Key market events
🎢 US tariffs
- The US imposed tariffs on Mexico and Canada at 25% and China at 20% on Monday. Only days later, Trump then reversed course, granting a wide number of Mexican and Canadian industries a further month’s reprieve.
🚫 US ends Ukraine military support
- The White House abruptly cut off all military aid to Ukraine following a disastrous meeting between the two countries leaders. European defence stocks rose on the prospect of the EU/UK stepping up to fill this void.
💰 Germany boosts defence spending
- Germany announced a loosening of its borrowing limits in order to increase defence spending. The country’s bond yields rose on the news meaning bond prices fell.
📉 EU cuts interest rates
- Despite geopolitical instability, the European Central Bank (ECB) continued lowering the deposit rate to 2.5% on the back of falling inflation.
🏭 Chinese manufacturing rebounds
- February data saw China’s manufacturing Purchasing Managers’ Index (PMI) rise, with output and new orders growing to a three-month high as market conditions improved.
What this means for financial advisers and clients
Global markets took a hit when US tariffs were rolled out, followed by retaliatory tariffs from Canada and China – adding to market uncertainty. While tariffs aim to shield domestic industries, they are widely seen as inflationary and damaging for growth, often driving up consumer prices and disrupting global supply chains.
Just days after these tariffs were implemented Trump granted a month-long exemption for the auto-industry. Shortly after that, in a major reversal, he announced that all Mexican and Canadian goods previously covered by the existing North American trade agreement, which covers 40-50% of all imports, would be granted the same delay.
Something markets hate is uncertainty - and what happens in April is a long way off from clear. Whether this is all part of Trump’s fiendishly clever master plan, or whether he simply panicked as markets dipped (a metric he famously judges himself by), only time will tell.
Chart of the week - there’s always an outperformer
Source: Vanguard, based on MSCI indexes and historical stock data from Bloomberg.
Why this matters
The chart highlights how much investment returns vary over time, showing the final value that would have been achieved from an $100 investment into the indices and specific stocks listed- based on a 10-year holding period ending 31st December 2024. A higher return can always be found somewhere else, whether from a competing investment style, country, sector or individual stock. This is something that’s much easier to identify in hindsight.
Constantly chasing performance can end up seriously increasing risk exposure. By its nature a diversified portfolio can always be beaten, it’s designed to limit exposure to the fortunes of any one particular asset-type, and instead help provide more consistent long-term returns. Although an investment in Nvidia in 2014 would have provided a massive profit today, many other assets have lost money over the same period.
As we all know, past performance doesn’t guarantee future returns and as global economic conditions continue to shift, today’s winning assets may not stay on top. As ever, diversification, and an understanding of the risk-return balance, remains key.
Market recap
US markets sink on tariff news
- The S&P 500 and NASDAQ tumbled as investors digested the economic impact of tariffs and an AI-related tech slump.
UK caught in the cross-fire
- Tariff unease spilled into European markets as trade war fears escalated, compounded by weakness in the UK construction sector.
Hang Seng gains on Chinese optimism
- Japan’s Nikkei 225 fell in local currency terms, as the Yen appreciated (making exports less competitive). While the Hang Seng bucked the trend and climbed on strong Chinese tech performance and anticipated economic stimulus.
Gold rises, oil falls
- Tariff concerns also fed into a drop in oil prices, as demand is expected to fall at the same time as producers signalled output increases. While its function as a safe-haven amid economic uncertainty increased demand for gold and pushed prices higher.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | -1.12% | 7.11% |
| FTSE 250 | -0.75% | -1.87% |
| S&P 500 | -5.85% | -5.06% |
| NASDAQ | -6.20% | -7.16% |
| MSCI Europe ex UK | +1.94% | +12.92% |
| Hang Seng | 4.13% | 18.76% |
| Nikkei 225 | 0.78% | -2.72% |
| Brent Crude | -5.06% | -6.91% |
| Gold Spot | 1.71% | 10.74% |
| UK 10yr Gilt yield | +17bps | +8bps |
| US 10yr Treasury yield | +3bps | -29bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close Thursday 6th March 2025.
Stay tuned for next week’s market insights
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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.
