As we start a new week, let's take a look at the significant events in the global economy over the past week with our weekly financial update, presented by Bas Kooijman, the CEO and Asset Manager of DHF Capital SA.

The U.S. stock market faced a challenging week amid trade policy uncertainty, persistent inflation, and slower growth fears. After starting on a cautiously optimistic note, sentiment deteriorated when the White House announced new 25% tariffs on non-U.S.-made automobiles, raising worries of retaliatory measures and further disruptions to global trade. Major indexes, including the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite, declined, with tech and communication services shares notably affected.

Inflation remained a central concern. The Bureau of Economic Analysis reported that core personal consumption expenditures (PCE), excluding food and energy, rose 0.4% in February and 2.8% year over year, well above the Federal Reserve’s 2% target. Meanwhile, consumer spending grew 0.1%, falling short of forecasts.

Economic data also signaled further waning consumer sentiment. The Conference Board’s consumer confidence index decreased for a fourth consecutive month, while the University of Michigan’s gauge posted a steep drop. These downbeat indicators and ongoing trade frictions fueled risk aversion, weighing on both equity and fixed income markets. U.S. Treasury yields initially increased on trade worries but later declined as caution took hold, leaving bond markets little changed by week’s end. Overall, investor sentiment remained subdued due to prolonged macroeconomic uncertainties.

European equities ended lower overall, pressured by new U.S. tariffs and mixed economic data. The pan-European STOXX Europe 600 Index lost around 1.4% after President Trump introduced a 25% levy on auto and auto part imports, starting next week. This sweeping policy weighed heavily on sentiment, given hopes that some nations would be granted exemptions. Further threats of additional tariffs if the EU retaliated also dampened risk appetite.

However, bright spots emerged. Economic updates showed the eurozone’s private sector expanding for a third straight month, with manufacturing output rising for the first time in two years. In Germany, the Ifo Business Climate Index reached its highest level since July 2024, reflecting optimism tied to increased defense and infrastructure spending. Meanwhile, in the UK, Chancellor Rachel Reeves revealed more spending cuts in the Spring Statement as the Office for Budget Responsibility halved its 2025 growth forecast to 1%. Still, the OBR upgraded projections for 2026 to 2029, and inflation dipped to 2.8% in February, stoking hopes of a May rate cut.

Geopolitical developments offered cautious relief. Ukraine and the U.S. reported constructive talks, followed by a partial ceasefire between Russia and Ukraine. Although tensions remain, this progress alleviated some immediate concerns.

Asian markets were mixed, with Japan’s stock indexes losing ground and China’s benchmarks ending little changed. In Japan, the Nikkei 225 and the TOPIX retreated as new U.S. auto tariffs weighed on carmakers, which comprise a portion of Japanese exports. Prime Minister Shigeru Ishiba expressed concern over the potential economic impact, calling for diplomatic efforts to secure an exemption. The yen hovered in the mid-JPY 150 range against the dollar, reflecting an outlook on the Bank of Japan’s next policy move.

Japanese government bond yields ticked higher after Bank of Japan Governor Kazuo Ueda hinted that additional rate hikes could be possible if inflation continues to broaden. In March, Tokyo’s core consumer price index rose 2.4% year over year, driven by rising food costs, suggesting price pressures may be more entrenched.

In China, markets struggled for direction, with the CSI 300 inching up while the Shanghai Composite dipped. Data showed a contraction in industrial profits, underscoring the need to boost domestic consumption. Beijing has made consumption growth a top priority to offset rising geopolitical risks and returns on infrastructure spending. Analysts expect policy support as China strives to hit its 5% annual growth target. Ultimately, policymakers may introduce further stimulus.

While the near-term outlook remains uncertain, a measured and proactive approach could help businesses and investors adapt to evolving market conditions and uncover long-term opportunities.