WeeklyWatch – Market behaviour reflects tariff disruption
15th April 2025
Stock Take
‘Liberation Day’ and the ongoing repercussions of the US tariffs continued to heavily impact the markets last week. And tariff rumours, pauses and changes didn’t help matters, forcing market behaviour to change on an almost daily basis.
Hitting pause
One such rumour that began to circulate last Monday was that tariffs would be paused for 90 days, but this was quickly quashed by the US administration. By Wednesday, it emerged that President Trump would reduce higher tariffs on a number of countries down to 10% for 90 days, with immediate effect.
With this small window of time in place, it’s likely that many nations will try to negotiate with the US to avoid their initial higher tariff level. But with this pause comes even more uncertainty, and it remains relatively unknown as to what compromises and offers nations will have to put forward in order to satisfy Trump.
Markets try to adapt
The tariff pause did help lift US equities – the S&P 500 and NASDAQ ended Friday noticeably higher than when they started on Monday. But although this sounds like positive news, both indices are still below pre-Liberation Day levels.
One of the big exceptions to the pause in the tariffs was China. Towards the end of the week, the two largest economies gradually increased their protectionist agendas against each other. Tariffs between China and the US are now incredibly high, even though trade volume between them decreased significantly after Trump was elected for his first term as President back in 2016.
Outside of tariff developments
In other economic news, US CPI inflation fell to 2.4% in March – down from 2.8% in February and below the 2.5% that had been anticipated. Included in this data would have been some price changes from the initial US tariff moves, like the 25% import tax on steel and aluminium, but it won’t include any of the more recent and further-reaching tariffs.
This places the Federal Reserve in a tricky situation. As inflation remains relatively low, Trump has encouraged the Fed to reduce interest rates in order to help the economy. However, the ongoing tariff changes and anticipation of higher prices could make cutting interest rates a risky option.
Signs of growth for the UK?
Chancellor Rachel Reeves revealed on Friday that GDP grew more than expected. The UK economy expanded by 0.5% in February, according to the Office for National Statistics (ONS). The news came at the same time that the ONS revised up their January figures from a 0.1% fall to a flat 0.0%.
Monthly GDP figures can be volatile and are often subject to revision, however. And some of the most recent growth may also have been boosted by exporters rushing to beat the US tariffs coming into place.
Despite the positive GDP news, the FTSE 100 index ended the week down 1.13%. There was a spike when Trump announced the temporary tariff reduction, even though the UK are facing a 10% tariff regardless.
Activity across the European continent
The MSCI Europe ex UK Index finished the week up. Shares were boosted after the temporary tariff changes took place on Wednesday.
As this week goes on, the European Central Bank is expected to cut their interest rates as inflation seems to be under a bit more control and growth is threatened by US tariff policy.
Wealth Check
Finish the sentence – “I’ve always wanted to…?”
When you’ve got your mind fully focused on your working life, retirement can seem like a distant dream and difficult to picture…
For the present and the future
When you start thinking about putting money aside, your bucket list should take a valued position in your financial plans – whether it’s taking up new hobbies, visiting friends near and far, going on that big trip or retreating to the countryside.
At the same time, day-to-day lifestyle also needs to be factored into your plans, such as increased healthcare costs as you age. This can feel like a big juggling act, which is why seeking out financial advice can help turn a ‘wish list’ into a realistic, practical and sustainable plan for your retirement.
Putting the retirement plan into action
A good place to start when planning for your retirement is to set aside a regular amount of money in an easily accessible account or Cash ISA for emergencies, acting as an important safety net. Aiming to have enough to cover your outgoings for six months is an advisable practice. You can also set aside further regular monthly amounts into other tax-efficient ISAs or your pension to boost your medium- and long-term financial goals.
There are plenty of options to help you save, including Stocks & Shares ISAs, Cash ISAs, other investments and pensions. Each option has different tax advantages and positive and negative outcomes attached, which makes seeking out financial advice when planning for retirement all the more important in order to find the right plan and solution for you.
Flexibility is key when it comes to stress-free retirement planning. Diversifying your savings options spreads the investment risk and allows you the choice of which pot you take from when you eventually stop working. If one option doesn’t perform so well, you can use another in the short term.
Additionally, turning hobbies or skills into an income during retirement years is a popular choice. Homeowners also may choose to rent out a room in their home before considering downsizing. And many of us will receive a form of State Pension.
The value of a financial adviser
By having regular meetings with your financial adviser, you can make changes to your financial plans as you go and as situations come up. Discussing your aspirations for retirement with someone you trust is highly reassuring, and you know that you won’t be compromising your living standards as you move forward.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
An investment in a Stocks and Shares ISA will not provide the same security of capital associated with a Cash ISA.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.
Please note Cash ISAs are not available through SJP.
The information contained is correct as at the date of the article. The information contained does not constitute investment advice and is not intended to state, indicate or imply that current or past results are indicative of future results or expectations. Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.
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