Take Two: Stocks slide on new US trade tariffs; Eurozone inflation eases
- 07 April 2025 (3 min read)
What do you need to know?
Stocks fell last week as markets digested the implications of the newly announced US trade tariffs. On 2 April, branded by President Donald Trump as ‘Liberation Day’, the US said it is introducing a baseline 10% US tax on goods from all countries and even higher reciprocal tariffs for nations which it describes as having steep barriers to US imports. The US effective tariff rate rose above 20% - its highest since 1909. Markets are now pricing in a heightened risk of a potential US recession. Over the week to Thursday’s close, the MSCI World index and S&P 500 fell by 4% and 5% respectively. Shares also dropped in Asia with Japan’s Nikkei down 4%, however the MSCI Europe eased by just 1%.1
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Around the world
Eurozone annual inflation eased to 2.2% in March, its lowest since last November and down from 2.3% in February, an official flash estimate showed. Core inflation, excluding food, energy, alcohol and tobacco, slowed to 2.4% from 2.6%. The decline raised expectations the European Central Bank will cut interest rates again this month. Meanwhile, Eurozone business activity marginally edged ahead during March, according to the HCOB Eurozone Purchasing Managers’ Index. Its latest composite reading, which includes both manufacturing and services data, came in at 50.9, its highest since August last year, and up from 50.2 in February - a reading above 50 indicates expansion.
Figure in focus: €1.3trn
Greater social mobility could boost the combined GDP of European Union nations by 9% - some €1.3trn - according to a new report from McKinsey & Company. The research highlights that social mobility can accelerate productivity via greater workforce participation, better skills matching, improved consumer spending and lower healthcare costs. However, it highlighted that more than a third of Europeans are facing employment and career barriers due to their socioeconomic backgrounds. Improving social mobility could help bridge the skills gap in Europe – according to the report, demand for high-skill jobs is expected to increase by 10 million positions by 2030.
Words of wisdom
District heating: A system where heat is generated in a centralised location then transported to individual homes and buildings through insulated pipes, potentially a vital tool in the transition to clean energy. District heating can lower energy usage through greater efficiencies and help reduce carbon emissions, by using heat from sources such as the electricity used to cool datacentres. In Sweden, district heating and heat pumps now meet over 75% of energy demand. In the UK, heat networks accounted for some 2% to 3% of heat in 2023, but it is estimated it will need to supply nearly 20% by 2050, if the country is to meet its net zero target.
What's coming up?
On Monday the Eurozone updates markets with its latest retail sales data. Wednesday sees India’s central bank meet to decide on interest rates, while the Federal Reserve publishes the minutes from its latest monetary policy meeting - it chose to hold interest rates steady at 4.25% - 4.50%. The US and China issue their respective inflation data updates on Thursday while on Friday the UK publishes monthly GDP figures.
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