Global markets reacted strongly to what was dubbed “Liberation Day”, when US President Trump finally revealed what had been the subject of speculation for so long: the full scale and detail of his tariff plans. Zurich Ireland takes a closer look.
Trump declared a 10% charge on all imports into the US from any country, accompanied by more severe levies on specific trading partners. Some notable inclusions were: 20% tariff on the EU, 34% tariff on China, and a 24% tariff on Japan.
The announcement “liberated” US equities from roughly $2 trillion in market capital on Thursday, which finished their worst week since the pandemic down 10.5% in euro terms, with some major indices falling into bear market territory.
The events had a significant impact on the public’s outlook for the US economy, particularly relating to growth, inflation and interest rates. The dollar weakened considerably amid the concerns, and the 10year treasury yield fell from 4.25% to below 4%, as investors rushed to the safety of bonds.
A US non-farm payrolls release on Friday had little impact on markets, despite showing 228,000 jobs were added in March, well in excess of projections of 140,000. Investors have now turned their attention towards those that were hit hardest by US tariffs, in fear that they might respond with import taxes of their own.
China have already acted, placing a 34% tariff on the US on Friday. Global stock indices fell commensurate to US counterparts last week. European equities sank -8.4%, while flash estimates for Eurozone March inflation revealed a fall to 2.2% from 2.3% in February.
In China, the PMI index indicated that manufacturing activity hit a 12-month high in March, but this couldn’t prevent stocks in Hong Kong from finishing the week -2.8% in the red.
Shares were also down in the UK and Japan, slipping -8.3% and -8.8% respectively. With the dollar on the defensive, EUR/USD rose to 1.10, its highest level since October.
Equities
Global stocks finished down -9.8% in euro terms and -8.5% in local terms last week. Year-to-date global markets are down by -15.1% in euro terms and down by -10.0 % in local terms. The US market, the largest in the world, finished at -10.5% in euro terms and -9.1% local terms.
Fixed Income & FX
The US 10-year yield finished at 4.0% last week. The German equivalent finished at 2.6%. The Irish 10-year bond yield finished at 2.9%. The Euro/US Dollar exchange rate finished at 1.10, whilst Euro/GBP finished at 0.85.
Commodities
Oil finished the week at $62 per barrel and is down -18.3% year-to-date in euro terms. Gold finished the week at $3,038 per troy ounce and is up 9.4% year-to-date in euro terms. Copper finished the week at $8,717 per tonne and is down -4.8% year-to-date in euro terms.
The week ahead
Thursday 10th April
US CPI inflation data for March goes to print.
Friday 11th April
US PPI data for March is released.
US consumer sentiment readings are reported.
About: Zurich Investments
The team at Zurich Investments is a long established and highly experienced team of investment managers who manage approximately €41.9bn in investments of which pension assets amount to €36.1bn. Find out more about Zurich Life’s funds and investments here.
The team at Zurich Investments is a long established and highly experienced team of investment managers who manage approximately €41.9bn in investment of which pension assets amount to €36.1bn. To find out more about Zurich Life’s funds and investments, w: zurichlife.ie/funds, Twitter: @ZurichLife, LinkedIn: linkedin.com/company/zurich-life-assurance-plc