World markets volatility intensified as the Trump ‘tariff tantrum’ impacted policy uncertainty surrounding the ‘on-again/off again’ tariffs. Renewed US recession fears, inflation concerns, weaker consumer sentiment and heady equity valuations, have contributed to the negativity in the markets with investors having to deal with policy uncertainty on a daily basis.

Since the second Trump presidency, US markets have underperformed on a quarterly and monthly basis. In March, the Nasdaq was the worst performing index in the US, losing 8.2% for the month, with the S&P 500 losing 5.8%, and the Dow, weaker by 4.2%. Selling pressure increased in the US toward the end of March after President Trump signed what he termed as ‘permanent’ an order to enact a 25% tariff increase on all auto imports, thereby raising prices for US consumers.

On the US economic front, February headline inflation (CPI), printed at 2.8% YoY, and cooled slightly more than expected compared to the January print of 3.0%. These numbers do not reflect the potential inflationary impact of the newly imposed tariffs. Core CPI, which excludes food and energy, printed at 3.1% YoY vs the January print of 3.3% YoY. Consumer confidence in March dropped to its lowest level in four years as concerns swirled regarding the impact tariffs would have on the economic outlook and higher prices. The Fed’s preferred inflation gauge, personal consumption expenditure (PCE), which also excludes food and energy, printed at 2.8% YoY, up from the 2.6% YoY print of January and the highest level since January 2024.

On the interest rate side, at its March meeting the Fed kept rates unchanged, while committee members lowered the 2025 GDP forecasts, seeing inflation potentially rising higher than their previous assessment. The ‘dot-plot, which shows policy makers’ predictions of the trajectory of rate cuts, points to potentially two further rate cuts for the year. The Fed indicated that it expects GDP growth of 1.7% for 2025, down from the December forecast of 2.1%, while revising the 2026 growth forecast lower to 1.8%. Inflation is expected to rise by 2.7% this year, up from the previous estimate of 2.5%.

The UK market also endured a weaker March, with the FTSE 100 ending the month lower by 2.6%, as UK inflation for February printed at 2.8% YoY, slowing from the January print of 3.0% YoY, with core inflation also down from the January print of 3.7% YoY to 3.5% YoY in February. Chancellor Reeves in her spring statement adjusted the budget amid an economic slowdown and rising borrowing costs, announcing £10 billion in spending cuts, after being faced with a £9.9 billion headroom erosion as a result of higher interest rates and growth forecasts.

Public sector net debt rose to its highest levels since the 1960’s, as borrowing overshot forecasts by £20.4 billion through February. On the back of the proposed US tariffs, risks loom large as the tariffs could shrink UK GDP by 1% in 2026/2027 and increase borrowing by £47.6 billion by the end of the decade, placing further strain on the fiscus.

Major European markets also ended the month on the back foot for the first time in 2025, highlighting the negative impact of the Trump tariffs. However, with rising optimism, Europe is being viewed as an attractive investment alternative to the US. The German Dax closed the month weaker by 1.7%, while the Cac in France closed lower by 4.0%. Inflation in the Eurozone in February eased to 2.3% YoY, compared to the January print of 2.5%, with core inflation printing at its lowest level since January 2022, coming in at 2.6% YoY. The Euro was up by around 4.3% for the period on the back of increased defence spending, coupled to debt reform in Germany, as well as a softer dollar, and increasing optimism over the fiscal plans of the EU. Germany’s €500 Billion fiscal plan unveiled this month, relaxes the debt brake, exempts spending on defence, and plans to fund infrastructure initiatives, which are expected to spill over to other European areas. It also changed the expectations for rate cuts, from a previously anticipated three to two by the end of 2025. The ECB may adopt a more cautious stance as it pauses to assess the fiscal impact on growth and inflation.

In Asia, while the US imposed auto tariffs caused some initial concern, this didn’t dampen the markets, with positive policy signals from Beijing, added to the hope of new technological innovations. The Hang Seng closed marginally higher, up 0.8% for the month, and the Shanghai Composite up 0.4% for the month. Chinese manufacturing PMI continued to expand, with the March numbers coming in at 50.5, compared to the February print of 50.2, and non-manufacturing PMI, which includes construction and services, reaching 50.8, compared to the previous reading of 50.4 in February. As we emphasise each month, readings above 50 equate to expansion, and those below 50 equate to contraction.

China’s economic and political tone was set for the year when the National People’s Congress concluded in mid-March, where Premier Li Qiang announced a growth target for 2025 of 5%, matching that of 2024. Key reforms focused on stabilising the economy and putting a focus on artificial intelligence (such as DeepSeek), with a 10 trillion yuan (US$1.4 trillion) package aimed at easing local government debt to enable growth. President Xi Jinping also prioritised self-reliance and domestic consumption over exports as well as defense spending in the light of US tariff threats.

In Japan, the Nikkei ended the month lower by 4.1%, as concerns around the impact the Trump tariffs would have on the Japanese economy. Japanese core inflation for February printed at 3.0%, lower than the January print of 3.2%, surpassing market expectations, but reinforcing concerns about persistent price pressures. The threat of the Trump tariffs cast a shadow as he criticised Japan for ‘weakening’ the yen and hinted at 25% tariffs on auto imports by April and risking a US$69 billion trade deficit fix. The tariff threat has led to leading Japanese electronics firms and industrial producers amassing stockpiles in the US, as well as adjusting their production and rerouting supply chains to counter the risk. With global uncertainties and its potential to disrupt inflation stability and export growth, the BoJ held its policy rate steady at 0.5% in March.

South Africa

On the local front, on the back of the Trump tariffs and the increased anxiety caused, we saw a flight to quality and safety with resources being the star performers on the market, with gold and platinum counters outperforming. The All-Share Index also closed the month 3.1% higher, closing at an all-time high on March 19 of 90,149.7. Resources ended the month higher by 19.5% with the gold price jumping 9.3%, with platinum up 5.1%, palladium up 7.4% and rhodium up 20.6% leading the gains.  Strong performers for the month were Sibanye Stillwater, up 47.6%, Anglogold up 30.5%, Gold Fields up 24.3%, Impala, up 42.9%, Amplats, up 35.3%, and Northam, up 30.5%. The Property sector lost 1.2%, with Industrials weaker by 0.6%. Financials were the other positive sector, up marginally at 0.2% with Standard Bank the standout performer, up 10% for the month.

On the economics front, the local economy showed modest signs of growth in Q4 of 2024, expanding by 0.6% QoQ, which followed a slight contraction in Q3 of 2024 of -0.1% with GDP for the whole of 2024 growing by 0.6%. Headline inflation for February was unchanged at 3.2%, with core inflation for the same period easing to 3.4% YoY, vs the January number of 3.5% YoY, the fifth successive month of inflationary easing.

The SARB’s March MPC meeting kept the repo rate unchanged at 7.5%, and as in its statement in January, it placed considerable emphasis on the continuing volatility in global markets. The delayed February budget was presented on the 12^th of March, but as before, it evoked a mixed reaction from the political parties and the market, as it represented an extremely complex balancing act by the government (GNU).