US stocks fell for the week, with tech and communication sectors hit hardest. Value stocks outperformed growth shares for the sixth straight week. Early optimism faded after President Trump announced new tariffs, including a 25% levy on all non-US autos, raising trade policy fears. Concerns deepened with weak consumer data and persistent inflation. The Fed’s preferred inflation gauge, core PCE, rose 0.4% in February, keeping y/y inflation at 2.8%, well above the 2% target. Consumer confidence dropped sharply, hitting a 12-year low, with inflation expectations rising. Business activity grew in March, driven by services, but future outlooks weakened due to tariff concerns. Treasury yields fluctuated, ending lower as investors grew wary of economic risks.
The STOXX Europe 600 Index fell 1.4% as US President Trump announced 25% tariffs on all auto imports, sparking fears of a trade war. France’s CAC 40 dropped 1.6%, Germany’s DAX lost 1.9%, and Italy’s FTSE MIB eased 0.8%, while the UK’s FTSE 100 edged up 0.1%. Markets started the week strong on upbeat economic and geopolitical news. Eurozone business activity grew for a third month, and Germany’s Ifo Business Climate Index hit an 8-month high. Hopes also rose with a partial ceasefire deal between Russia and Ukraine. In the UK, Chancellor Rachel Reeves announced further spending cuts, while the OBR cut its 2025 growth forecast to 1%. Still, UK inflation dipped to 2.8% in February, boosting hopes for a rate cut in May. Longer-term growth projections were revised upward from 2026 onward.
