Tariff news continued to rattle the markets in March. From the beginning of the month the trade war accelerated as Trump's 25% import taxes on Canadian, Mexican and Chinese goods went into effect, following a one month delay. The moves drew fast retaliation from Canada, which brought in a sweeping package of counter-tariffs on US products while China hit back with duties up to 15% on US farm goods. A week later, after US indices suffered the strongest loss in half a year, Trump paused the tariffs again. As the tariff news continued to cause uncertainty on a daily basis, expectations of a US recession in 2025 are gaining momentum with some of United States largest banks dramatically cutting GDP forecasts.

As the quarter came to a close, investors were awaiting 2 April, dubbed »Liberation Day« by Trump, and the announcement of a broader swathe of tariffs.

In March the Dow Jones, S&P500 and Nasdaq Composite lost 4,20%, 5,75% and 8,21% respectively. Additionally the US dollar lost 4,26% against the Euro, closing at 1,0817USD/EUR.

Also European and other markets were affected by the tariff uncertainties on concern that the EU and other countries' exports to the US could be next to face tariffs. The German DAX, French CAC and Eurostoxx 50 lost 1,72%, 3,96% and 3,94% respectively. Slovenia's SBI Top index lost 1,46% and remains one of Europe's strongest performers over the entire first quarter after stellar returns in January and February for a total return of 20,78%.

Inflation in the EU however notched lower to just 2,3% in February and 2,2% in March. This allowed the European Central Bank (ECB) to once again reduce the interest rate by 0,25p.p. to 2,50% - the lowest in 2 years. Another 0,25p.p. cut is expected in April.

United Kingdom's FTSE index lost 2,58% while the Pound Sterling lost 1,53% against the Euro.

The strongest market in March, despite the tariff threats, were once again China and Hong Kong with Hong Kong's Hang Seng index being one of the few indices gaining in March, adding a modest 0,78%.

Japan's Nikkei index on the other hand fell by 4,14%. Macro data in Japan however is improving with Japanese government bond yields rising, driven by positive inflation and wage growth data.

Gold miners had an excellent performance in March as the precious metal continues to touch all-time highs, gaining 10,60% to 3150$ per ounce in March as market uncertainties due to tariffs, expectations of a US recession and the weakening dollar drive investors to precious metals to hedge market risk.

Rudy Marchant
Fund manager Primorski skladi

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