Global stocks closed modestly higher after another highly volatile week in which a slew of tariff headlines continued to dominate the news. With financial markets opening the week under duress, President Trump revealed a 90-day pause to the majority of his reciprocal tariffs above a baseline 10% rate, offering some respite all countries except China. Volatility, as measured by the CBOE Volatility Index (VIX), again reached beyond 50 during trading on Wednesday before easing back to 37 on Friday, well above historical averages.

In what became a back-and-forth with China, US President Trump doubled, then tripled down on his tariffs, raising the rate on imports from that country to 145%. China responded in kind, first to 84% and then 125% on some US goods. Beijing signalled it would not match any further increases by Washington which it deemed a futile exercise. Equity markets briefly welcomed the respite, however since the pause, the reaction of bond and currency markets has cast into doubt the roles of US treasuries and the Dollar as traditional safe heavens, with both under pressure. Non-US investors may be losing faith or this may simply be a unwinding or rebalancing of a long-standing overweight position in US assets. The yield on the US 10-year Treasury note jumped more than 50 basis points to 4.5%. 

On an economic standpoint, US inflation moderated according to the latest consumer price index data, offering some limited support for US growth investors in an otherwise bleak market environment. Consumer prices fell 0.1% in March from the month before and core inflation rose only 0.1%. Those figures were followed by news that producer prices fell more sharply, declining 0.4% in March from the month before and falling 0.1% when stripping out food and energy. 

Elsewhere, UK investors saw modest losses in the FTSE 100 over the course of the week with the large-cap index down -1.13%, but a more resilient week for the mid-cap and AIM markets, both of which posting positive returns having come under pressure year-to-date. An upside surprise on Q1 economic growth helped the domestic outlook.

Asian markets suffered sharp early week losses, but recovered ground to leave the Hang Seng and Japan’s Nikkei 225 posting local currency losses of -8.42% and -0.57%, respectively.

Week Ahead

Source: Bloomberg, 14/04/25

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