Unpredictable

It has been a tumultuous week for global markets, with major indices see-sawing as investors try to keep up with US President Donald Trump’s unpredictable tariff rollout.

“Tariff uncertainty has dominated investor sentiment in every direction this week. However, the volatility should begin to recede now that the president announced a 90-day pause,” says Mark Sherlock, Head of US Equities at Federated Hermes Limited. “We expect this to further stabilise as a clearer understanding of the longer-term policy backdrop materialises.” Since Trump’s inauguration in January, markets have seen a flurry of executive orders, policy changes and tariff announcements which have fuelled uncertainty and resulted in a risk-off environment, explains Sherlock. However, he remains optimistic, despite the volatility. 

Elsewhere... 

The market turbulence this week has added to expectations that the European Central Bank (ECB) will cut rates at its meeting on 17 April. 

“With a 25 basis-point cut essentially nailed on, we will be watching closely to see how ECB President Christine Lagarde frames the policy decision and whether she provides commentary on recent market volatility,” says Orla Garvey, Senior Fixed Income Portfolio Manager at Federated Hermes Limited.

The market consensus is that the ECB will cut rates by 75 basis points over the course of this year and while the tariff picture is rapidly evolving, there is no doubt that macroeconomic volatility is increasing downside risks for economic growth in the near term, Garvey says. 

“The positive impact of German fiscal spending will not be felt until 2026. In contrast to the US, the deterioration in the growth outlook in Europe does not come with the same upward inflationary impulse. In fact, it is likely to be the opposite, which will give the ECB greater confidence in its inflation forecasts and keep it on track with its cutting schedule,” she adds.