World.Alpha-News.org ➤ The news of the world is here
Take Five: Tantrums and Tiara Tales

The first three months of 2025 appeared turbulent, but few anticipated the world teetering on the brink of a full-blown trade war, with investors rapidly exiting Wall Street following U.S. President Donald Trump’s return to the White House.

Investors in emerging markets have been unsettled by a series of domestic crises, while UK markets are facing their own challenges as the effects of Trump's tariffs become evident in global economic data.

U.S. equities are experiencing significant selloffs, leading cash to flow into previously overlooked markets. Europe's STOXX 600 index is projected to gain 9.3% in the first quarter, contrasting sharply with the S&P's 4.5% loss—marking its strongest performance against the U.S. benchmark in the first 12 weeks of the year since 2015. European leaders have been prioritizing funding for security amid doubts surrounding continued U.S. support. Meanwhile, Chinese tech stocks have surged, with a regional index soaring over 30%, while major Wall Street tech stocks have declined by 15%.

Global stocks, excluding those from the United States, are on track for their best first-quarter performance since 2019.

Amid this environment, investors are shifting from the sentiment of "There Is No Alternative" (TINA) regarding U.S. stocks to considering "There Is A Real Alternative" (TIARA).

Recent selloffs in Turkey, Indonesia, and Colombia have brought attention to ongoing challenges affecting certain developing economies. Turkey had seen renewed investor interest following a return to orthodox monetary policy; however, the detention of Istanbul's mayor, a key political rival of President Tayyip Erdogan, caused a sharp drop in stocks and bonds, prompting the central bank to raise rates.

In Indonesia, concerns regarding the fiscal strategy and growth outlook have unsettled the rupiah and stocks. In Colombia, the finance minister resigned amid disputes over budget cuts, shortly after legislators rejected a labor reform proposed by the leftist president, who has already replaced 12 of his 19 ministers.

As concerns grow regarding slowing growth and tariff uncertainties, investors will receive new U.S. economic data in the coming week, including a crucial inflation metric. The personal consumption expenditures (PCE) price index for February is due on March 28, and the Federal Reserve recently revised its PCE forecast for year-end to 2.7%, up from 2.5%—above its target of 2% for annual inflation.

Fed Chair Jerome Powell has indicated that the U.S. central bank is seeking greater clarity on Trump administration policies as it considers the timing for future rate cuts. Measures of consumer confidence will also be in focus following a slight rebound in consumer spending in February.

UK investors are poised to see whether weak growth and unexpectedly high inflation have derailed the Labour government's budget targets to the extent that markets call for a return to austerity measures. Alongside Finance Minister Rachel Reeves' Spring Statement on March 26, the Office for Budget Responsibility (OBR) is expected to revise down its forecasts from October, which had assumed the government would adhere to its self-imposed spending rules.

The Institute for Fiscal Studies suggests that even a modest downgrade by the OBR could force Reeves into a difficult position of choosing between tax increases, spending cuts, or enduring months of speculation regarding the Autumn budget.

Long-term UK debt costs, as set by the gilt markets, are currently about 15 basis points below January's multi-decade highs following Labour's commitments, but bond investors are concerned about a potential breach of the government's fiscal rules.

Australia and Tokyo will release their inflation reports in the upcoming week, as central bankers worldwide evaluate the impact of Trump's policies on global price pressures. February inflation in Australia is expected to remain steady, which could support a cautious approach to future rate cuts.

Tokyo's inflation data is due on Friday, as the Bank of Japan (BOJ) continues to monitor rising domestic price pressures that may prompt further monetary tightening. The BOJ kept rates unchanged in its March meeting and provided few indications on the timing of its next rate hike. However, Governor Kazuo Ueda hinted that a rate increase could occur even before uncertainties around Trump's policies are resolved.