Take Two: Market volatility continues as trade war escalates; US inflation lower than expected
- 14 April 2025 (3 min read)
What do you need to know?
Markets endured more heavy volatility last week as international trade tensions significantly escalated. Following the initial 10% US tax on all imports, dozens of nations were hit with even higher taxes. However, on Wednesday, US President Donald Trump announced a 90-day pause on these ‘reciprocal’ tariffs on all nations, except for China, where he increased duties to 125%, though some goods will be subject to 145% including an earlier 20% tariff. On Friday, Beijing in turn increased its tariff on US imports to 125%. Trump’s postponement saw markets rally, regaining some of the lost ground. Over the week to Thursday’s close, the MSCI World index and S&P 500 were respectively down by 3% and 2%. Elsewhere the MSCI AC Asia index was 5% lower and the MSCI Europe fell 6%.1
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Around the world
US annual inflation slowed more than expected to 2.4% in March, a six-month low, from 2.8% in February. An easing in oil prices contributed to this fall with motor fuel costs down 6.3% on the month. Meanwhile core inflation, which excludes more volatile food and energy prices, fell to 2.8% from 3.1% previously, below market estimates of 3%. Minutes from the Federal Reserve’s March meeting showed that policymakers almost unanimously agreed that the US economy is at risk of experiencing higher inflation and slower growth. Officials agreed to keep interest rates on hold at their last policy meeting due to increased uncertainty around the economic outlook.
Figure in focus: 40%
Clean energy accounted for more than 40% of all electricity generated globally last year, thanks to record growth in renewables - especially solar power - according to a report from think-tank Ember. However, power sector emissions also rose to an all-time high as fossil fuel use increased slightly, to keep up with growing demand for air conditioning due to heatwaves. The report highlighted that while solar generation has doubled over the last three years, hydro power remained the largest source of low-carbon electricity. Ember said clean energy generation growth “will reduce reliance on fossil fuel power in the coming years”.
Words of wisdom
Microfactories: Small manufacturing facilities which are highly automated, often leveraging robotics, artificial intelligence and machine learning to maximise production efficiency while minimising the floorspace needed. Microfactories can be more sustainable and more cost effective, according to the World Economic Forum. They can also be beneficial when producing smaller volumes of more customised products, with reduced overhead costs and more flexibility than larger manufacturing facilities, helping companies in this space to potentially gain a competitive advantage.
What's coming up?
On Tuesday, Australia’s central bank publishes the minutes of its latest monetary policy meeting, while Canada issues an inflation data update. The UK and Eurozone follow with their own inflation numbers on Wednesday, when China also issues first quarter GDP growth numbers. On the same day, Canada’s central bank convenes to set interest rates while the European Central Bank meets on Thursday - in March, it cut its benchmark rate by 25 basis points to 2.50%. On Friday, Japan issues inflation figures.
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