Bassanese Bites: On again, Off again – March 10 2025
Global markets
To repeat last week’s opening line, “global equities retreated further last week due to ongoing US tariff concerns and additional evidence of negative effects on the US economy.”
Trump’s tariff saga continued to dominate global market sentiment last week. Markets slumped on Monday after Trump confirmed he would press ahead with steep tariffs on Canada, Mexico and China. He then relented with a one-month delay on car imports and a one-month delay on most imports. This week, he said he’d implement ‘reciprocal’ tariffs on Canadian lumber and dairy imports. It’s fair to say the on again/off again policy making is creating tremendous market uncertainty.
This lingering uncertainty is starting to bleed into the economy. A soft US manufacturing report added to market angst after two recent weak consumer sentiment reports.
At the end of last Thursday’s trading session, the S&P 500 had fallen 6.6% from its peak on 1 February. Friday’s February US payrolls report was a touch softer than expected. Last month, 151,000 jobs were created (economists were expecting 160,000) and the unemployment rate edged higher to 4.1%.
Trump also conceded last week that the economy faces ‘adjustment’ and ‘transition’ as he pursues tariff increases and spending cuts. He also indicated he’s not watching the share market. This makes his repeated backtracking on tariff implementation all the more perplexing.
In other news, optimism around more stimulus in Europe and China is building. A meeting of EU leaders last week talked up the need to increase defence spending.
Incoming German Chancellor Friedrich Merz has also indicated his intention to collaborate with the existing parliament (namely the SPD and Green parties) to ease the current legislative barrier to increased German fiscal stimulus. This barrier is known as the ‘debt brake’.
Achieving this task is an urgent priority for Merz, as it will be significantly more difficult to secure the necessary votes once the new parliament convenes.
China’s Two Sessions series of policy meetings also talked up the prospect of more stimulus measures. The Xi administration has pledged a growth target of “around 5%” for this year.
Global week ahead
The week ahead will likely continue to be dominated by tariff news. Will he or won’t he proceed with planned tariff increases?
