On the economic front, U.S. retail sales rose 1.4% in March, marking the biggest increase in over two years. The surge was largely driven by a 5.3% jump in vehicle and auto parts sales, as consumers rushed to buy ahead of a proposed 25% tariff on imported automobiles. Gains were also seen in building materials, sporting goods, and electronics.
U.S. stocks closed lower in a holiday-shortened trading week, with escalating tariff concerns weighing heavily on investor sentiment. The Dow Jones Industrial Average and the Nasdaq each fell more than 2.6%, while the S&P 500 lost 1.5%. All three major indices continued their downward trend sparked by President Trump’s initial announcement of “reciprocal” tariffs on April 2nd — a proposal he has since walked back. Since then, the S&P 500 has dropped nearly 7%, while both the Dow and Nasdaq have declined more than 7%.
Further dampening the market mood were comments from Federal Reserve Chair Jerome Powell, who spoke at the Economic Club of Chicago. Powell noted that recent tariff increases have been "significantly larger than anticipated" and warned of potential higher inflation and slower growth. President Trump responded with a blistering social media post, stating "his termination can’t come fast enough!" despite Powell’s term running through May 2026. Trump reiterated his belief that the Fed should have cut interest rates long ago.
The STOXX Europe 50 Index climbed 3.09% in local currency terms. Market optimism was fuelled by President Trump’s decision to delay additional tariffs and signals from the European Central Bank (ECB) hinting at further rate cuts. The ECB slashed its deposit rate to 2.25% on Thursday, the lowest since February 2023. President Christine Lagarde cited ongoing trade tensions as a major downside risk and emphasized a data-dependent, meeting-by-meeting approach going forward.
UK headline inflation slowed to 2.6% in March from 2.8% in February, thanks to softer prices in fuel, toys, and hobbies. Services inflation — closely watched by the Bank of England — also cooled to 4.7% from 5%, more than expected. The FTSE 100 Index gained 3.91% for the week.
Japan's Nikkei 225 Index advanced 2.36% as investors welcomed tentative progress in U.S.-Japan trade negotiations. Japan is lobbying for a review of existing U.S. tariffs on its exports, with President Trump declaring “big progress” after initial talks. A second round of discussions is expected later this month.
China's Shanghai Composite Index rose 1.17% for the week, bolstered by expectations of fresh stimulus measures. China’s GDP grew 5.4% year-over-year in the first quarter, the National Bureau of Statistics said on Wednesday, beating expectations, though analysts caution the growth was likely driven by front-loaded shipments ahead of recent U.S. tariff hikes. In Hong Kong, the Hang Seng Index gained 1.98% over the week.
Market Moves of the Week
South Africa's Finance Minister Enoch Godongwana warned that any delay or cancellation of the proposed VAT increase would have severe consequences for the country’s finances. This was revealed in court documents amid a deepening rift within the coalition government. The African National Congress (ANC) and the Democratic Alliance (DA) — the two leading parties in the coalition — remain divided over the plan to raise VAT by 0.5 percentage points on May 1, followed by another 0.5% hike in 2026. The National Treasury estimates the VAT increase could generate 13.5 billion rand in additional revenue for the 2025/26 financial year, which is crucial for balancing the nation’s budget.
The rand strengthened against the U.S. dollar this week, closing at 18.80/USD, up 1.7%. The gain came as global investors awaited clarity on U.S. tariffs, while local markets tracked the ongoing budget standoff and its potential impact on the stability of the ruling coalition.
On the commodities front, gold prices eased on Thursday as investors took profits following a sharp rally that had pushed bullion to record highs. Despite the pullback, safe-haven demand remains elevated due to ongoing U.S.-China tensions and global trade uncertainties. Brent crude rose more than 4% over the week to close at $67.72 per barrel. The rally was fuelled by a mix of geopolitical risks, tightened supply, and robust seasonal demand, adding upward pressure to energy prices.
On the stock market, the JSE All Share Index (ALSI) ended the week 3.5% firmer, with the financial (5.16%), listed property (6.08%) and industrial (3.87%) sectors driving the gains.
Chart of the Week:
The latest survey of global fund managers by Bank of America Corp., the first since the “Liberation Day” tariffs announcement, showed a dramatic increase in fears of a potential economic hard landing.
Credits: Strategic IQ
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