US stocks saw their worst week in over five years after the Trump administration announced unexpectedly harsh tariffs. Fears of a trade war, slower economic growth, and rising inflation triggered a sharp market selloff, with all major indexes posting heavy losses. Treasury yields dropped as investors fled to safer assets. The tariffs also pushed manufacturing back into contraction and raised costs, according to ISM data. Fed Chair Jerome Powell acknowledged rising risks but said the economy remains stable for now. Meanwhile, job growth surprised to the upside with 228,000 jobs added in March, though concerns over tariffs overshadowed the positive labor report and kept market sentiment down.
European markets suffered steep losses, with the STOXX Europe 600 down 8.4%, its biggest drop in five years. Italy’s FTSE MIB fell over 10%, and major indexes in Germany, France, and the UK also dropped sharply. Amid rising uncertainty, ECB officials signaled a possible pause in rate cuts. President Christine Lagarde stressed caution on inflation, citing US trade risks, while policymakers remain divided on the timing of easing. Despite this, markets now see a 90% chance of an April rate cut. Eurozone inflation slowed slightly to 2.2% in March, and unemployment hit a record low of 6.1%. In the UK, house prices stalled in March ahead of a tax increase, and mortgage approvals dipped to a seven-month low, signaling a cooling housing market.
