Global Risk Monitor: Week in Review – March 28

Key Observations:

• New Tariff Impact: Trump announced a sweeping 25% tariff on all non-U.S.-made automobiles, sharply impacting global equity markets and especially hurting export-reliant sectors like autos in Europe and Japan.
• S&P 500 Breaks Technical Support: The S&P 500 has fallen below its 200-day moving average, signaling increased risk for further market downturn and diminished investor confidence.
• Consumer Confidence Collapse: U.S. consumer expectations dropped to a 12-year low, signaling widespread pessimism about personal finances, labor conditions, and the broader economy.
• Rising Inflation Amid Weak Spending: Core PCE rose 2.8% YoY while inflation-adjusted consumer spending barely increased, highlighting stagflation-like dynamics exacerbated by tariffs.
• Global Manufacturing Divergence: While global manufacturing remains slightly expansionary (PMI 50.9), export orders have declined and business optimism is at an eight-month low.
• “Tariff Day” Looms Large: Scheduled for Tuesday, April 2nd, reciprocal tariff announcements are expected to fuel continued market volatility regardless of content due to heightened uncertainty.
• Trump’s Policies as a “Wrecking Ball”: The administration’s aggressive and unpredictable tariff strategies are undermining the global economic and geopolitical framework, complicating forward-looking market and policy planning.

Markets

U.S.

Financial markets have shown increasing fragility in response to former President Trump’s aggressive tariff stance, underscoring the destabilizing effect of protectionist measures. The announcement of a sweeping 25% tariff on all non-U.S.-made automobiles acted as a catalyst for widespread declines in global equity markets. The S&P 500, a key barometer for U.S. equities, has notably dropped below its 200-day moving average—an important technical signal that often presages extended downturns. This technical breach has amplified fears among investors, further compounded by deteriorating consumer sentiment and disappointing inflation-adjusted spending data.

Global

Globally, equity indexes mirrored U.S. market weakness. The pan-European STOXX Europe 600 declined amid fresh auto tariffs, particularly damaging for economies with significant automotive exports to the U.S., such as Germany and Japan. Japan’s Nikkei 225 also retreated, pressured by fears that the country’s auto sector—responsible for a third of its U.S.-bound exports—would be severely impacted. The tariffs have triggered a risk-off sentiment, discouraging investors and tightening financial conditions across developed and emerging markets alike.

Economics

U.S.

Trump’s approach to trade policy, described aptly as a “wrecking ball” to the geopolitical and economic frameworks, is contributing to a multi-shock scenario. While immediate economic data—such as the modest acceleration in business activity and temporary upticks in employment—paint a nuanced picture, the underlying sentiment and soft indicators are sharply negative. Consumer confidence has reached its lowest point in over a decade, and inflation expectations have surged, suggesting broad concerns about long-term economic stability.

The inflationary implications of tariffs are particularly evident. The core personal consumption expenditures (PCE) index rose 2.8% year-over-year, well above the Federal Reserve’s target. Input prices are increasing at the fastest rate in nearly two years, with businesses citing tariffs and higher labor costs as key factors. Despite this inflationary pressure, personal spending has softened, indicating a consumer base increasingly wary of future conditions.

Global

Internationally, global manufacturing shows signs of resilience, but with caveats. The J.P. Morgan Global Manufacturing PMI remained slightly expansionary at 50.9, but optimism fell to an eight-month low. New export orders declined for the first time in three months, a clear reflection of deteriorating trade flows. Europe, particularly the eurozone’s core economies, continues to struggle amid persistent tariff threats. In Asia, China faces prolonged deflationary risks, further exacerbated by weak consumer demand and export challenges tied to the escalating trade tensions.

Week Ahead

Markets are bracing for heightened volatility heading into “Tariff Day” on Tuesday, when reciprocal tariffs are expected to be announced. Regardless of the specific details from the White House, the uncertainty surrounding Trump’s tariff regime is likely to remain entrenched. The mere anticipation of these measures is already shaping trading behavior, with many investors retreating from risk assets.

The upcoming week will also feature pivotal economic data, including the Nonfarm Payrolls report, which could influence both market sentiment and Federal Reserve policy expectations. However, even potentially strong labor figures may not be enough to offset the overarching concern that tariff escalation will further erode growth prospects and investor confidence.

Looking ahead, unless there is a significant policy reversal or a diplomatic breakthrough, Trump’s tariffs will likely continue to pressure global supply chains, stoke inflation, and strain market performance. The administration’s evident tolerance for economic fallout in pursuit of geopolitical leverage adds a layer of unpredictability that hinders markets’ ability to price in future risks effectively.

Source: https://global-macro-monitor.com/2025/03/29/global-risk-monitor-week-in-review-march-28/