Please see below article received from Brooks Macdonald this morning, which provides a global market update for your perusal.
What has happened
A good-but-not-great set of results from Nvidia on Wednesday evening plus more trade tariff comments from US President Trump in the past 24 hours collectively weighed on sentiment yesterday. The US technology megacap ‘Magnificent Seven’ group fell -3.03% on Thursday, with Nvidia down -8.48%. That pushed the US S&P500 equity index down -1.59% yesterday, and on course for its worst week since September, while the pan-European STOXX600 equity index dropped around -0.46%, all in local currency price return terms.
More Trump tariff headwinds for markets
Markets had to weather more Trump tariff headwinds on Thursday. Yesterday saw US President Trump announce an additional 10% trade tariff hike on China, as well as pushing ahead with 25% tariffs on Canada and Mexico, all due to be effective from Tuesday next week, 4th March. In addition, Trump said his plan for “reciprocal” tariffs on those countries that currently tariff US trade would still go ahead as planned in just over a month’s time on 2nd April.
A mixed US economic and inflation picture
Yesterday saw a second update on calendar Q4 2024 US economic growth and inflation. In the mix, US Gross Domestic Product (GDP) rose by an unrevised +2.3% quarter-on-quarter annualised – still a decent number versus the US Federal Reserve’s longer-run US economic growth estimate of +1.8%. However, as regards underlying inflation, according to the US Personal Consumption Expenditures (PCE) price index, core prices (excluding energy and food) rose to +2.7% quarter-on-quarter annualised, faster than the +2.5% initially reported and expected.
What does Brooks Macdonald think
Trump’s tariffs hold a stagflationary tilt-risk for markets, in that, at the edges, such trade levies would dampen economic growth, while buoying inflationary pressures. Of course, it is worth bearing in mind that we have potentially seen this movie before so-to-speak .. at the start of February, Trump’s proposed tariffs against Canada and Mexico were extended by a month with just hours to spare until they had been due to come into force. As the late British historian A.J.P. Taylor, who specialised in 19th and 20th century international diplomacy, reminds us, “nothing is inevitable until it happens.”
Bloomberg as at 28/02/2025. TR denotes Net Total Return.
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Chloe
28/02/2025