World markets’ volatility intensified as the Trump ‘tariff tantrum’ impacted policy uncertainty surrounding the ‘on-again/off again’ tariffs. Renewed US recession fears, inflation concerns, weaker consumer sentiment and heady equity valuations have contributed to the negativity in the markets, with investors having to deal with policy uncertainty on a daily basis.

Since the second Trump presidency, US markets have underperformed on a quarterly and monthly basis. In March, the Nasdaq was the worst performing index in the US, losing 8.2% for the month, with the S&P 500 losing 5.8%, and the Dow, weaker by 4.2%. Selling pressure increased in the US toward the end of March after President Trump signed what he termed as ‘permanent’ an order to enact a 25% tariff increase on all auto imports, thereby raising prices for US consumers. On the US economic front, February headline inflation (CPI), printed at 2.8% YoY, and cooled slightly more than expected compared to the January print of 3.0%. These numbers do not reflect the potential inflationary impact of the newly imposed tariffs. Core CPI, which excludes food and energy, printed at 3.1% YoY vs the January print of 3.3% YoY.

US GDP growth is forecast at 2.0% for 2025, underpinned by consumer resilience and capex, but activity data is softening (PMl’s and retail sales), signalling a pivot to a stagflation-lite macro regime. Inflation remains sticky, weighing on business and consumer sentiment. Investment intentions are declining. The Fed has yet to confirm cuts and fiscal stimulus is fading. The combined policy stance remains tight, limiting upside for rate sensitive sectors. 2025 EPS growth is still projected at ~9- 10% YoY, led by tech, financials, and industrials. However, revision breadth has narrowed to just 30%, and 53% of earnings pre-announcements have been negative, the highest since early 2023, indicating weakening forward guidance.

The S&P 500 traded at 21.5x forward earnings, vs. 30-year average of 16.9x. This premium looks increasingly vulnerable as earnings expectations soften. US equities traded at a premium to Europe (14.2x) and EM (12.2x). Global allocators are starting to rotate away from US exposure. Value, momentum, and minimum volatility are now outperforming, while quality and small caps have underperformed the S&P 500 index. The US has now underperformed global equities for the first time in two years. Japan, Europe, and Emerging Markets (EM) are benefiting from net earnings upgrades versus US downgrades.

Major European markets also ended the month on the back foot for the first time in 2025, highlighting the negative impact of the Trump tariffs. With rising optimism, however, Europe is being viewed as an attractive investment alternative to the US. The German Dax closed the month weaker by 1.7%, while the Cac in France closed lower by 4.0%. Inflation in the Eurozone in February eased to 2.3% YoY, compared to the January print of 2.5%, with core inflation printing at its lowest level since January 2022, coming in at 2.6% YoY.

Real GDP growth for the Eurozone is forecast at 1.1%-1.2% for 2025. The core (Germany and France) continues to underperform due to weak manufacturing activity and subdued external demand, while peripheral regions such as Spain and Italy show resilience driven by infrastructure and services. Policy tailwinds remain persistent. Net earnings revisions have turned positive in Europe, led by Germany, Spain, and Sweden. 2025 EPS growth estimates have been revised to +8.0% for Europe vs 0.4% in 2024, driven by Aerospace, Chemicals and Industrials.

The UK market also endured a weaker March, with the FTSE 100 ending the month lower by 2.6%, as UK inflation for February printed at 2.8% YoY, slowing from the January print of 3.0% YoY, with core inflation also down from the January print of 3.7% YoY to 3.5% YoY in February. In her spring statement, Chancellor Reeves adjusted the budget amid an economic slowdown and rising borrowing costs, announcing £10 billion in spending cuts, after being faced with a £9.9 billion headroom erosion due to higher interest rates and growth forecasts.

The UK remains an earnings laggard amid local demand weakness and inflation. Eurozone equities traded at 14.2x forward P/E (20-year average is 12.8x) and at a ~33% discount to US equites, among the cheapest globally. This is the first time since early 2023 that all timeframes (short, medium, long) showed positive technicals, with Eurozone equities now outperforming all major regions, though stretched in short term. Institutional exposure remains below long run average but is rising.

In Japan, the Nikkei ended the month lower by 4.1%, as concerns around the impact the Trump tariffs would have on the Japanese economy. Japanese core inflation for February printed at 3.0%, lower than the January print of 3.2%, surpassing market expectations, but reinforcing concerns about persistent price pressures.

Japanese real GDP growth for 2025 is projected at 1.0-1.2%, driven by resilient domestic demand, capex recovery and a competitive yen. Japan remains a rare Developed Market (DM) beneficiary of global disinflation and easing financial conditions. EPS growth has been revised down to 5.5% (from 8%), with autos/machinery guidance weakening. Japan is becoming a domestic growth play as Spring wage settlements suggest +4% base wage gains, the strongest in decades, pointing to durable rotation toward domestic consumption. We have witnessed strength in durables, housing and services, aided by household balance sheet health (low debt, high savings). Japan trades at a forward P/E of 14.6x, significantly below US and global markets, with attractive dividend yields and share buybacks supporting valuations. Medium- and long-term signals remain constructive with short-term price action weakening due to the March pullback and rotation. Net flows are rotating from global beta (tech and exporters) to domestic reflation plays with shareholder returns rising steadily (dividends and buybacks giving a >3.5% yield), remains under owned by foreign asset allocators.

In Asia, while the US imposed auto tariffs caused some initial concern, this didn’t dampen Asian markets, with positive policy signals from Beijing adding to the hope of new technological innovations. The Hang Seng closed marginally higher, up 0.8% for the month, and the Shanghai Composite up 0.4% for the month. China’s economic and political tone was set for the year when the National People’s Congress concluded in mid-March, where Premier Li Qiang announced a growth target for 2025 of 5%, matching that of 2024.

Emerging market real GDP growth has been revised up to ~4.0% in 2025, driven by expected developed market policy easing, bottoming of global trade volumes, and strong domestic demand in Asia and select EMs (India, Indonesia and Mexico). Internal demand is supporting India and ASEAN, with foreign direct investment backed capex cycles and consumer resilience, while supply chain relocation trends also remain supportive. EM equities traded at a forward P/E of 12x- well below DM peers (Europe: 14.2x, US: 21.5x), highlighting a compelling valuation cushion despite short-term risks surrounding policy flow through, USD trajectory and China stabilisation. Regional disparities remain acute. EM and Asia show weak short-term technicals, but both are now registering buy signals across medium term signals, and early evidence of bottoming. Fund flows have turned constructive as Asia EM ETFs posted $8.8bn in net YTD inflows, concentrated in India, Korea, and Indonesia. LATAM flows remain muted.

On the local front, on the back of anxiety caused by the Trump tariffs, we saw a flight to quality and safety with resources being the star performers on the market, with gold and platinum counters outperforming. The All-Share Index closed the month 3.1% higher, as well, closing at an all-time high on March 19 of 90,149.7. Resources ended the month higher by 19.5% with the gold price jumping 9.3%, with platinum up 5.1%, palladium up 7.4% and rhodium up 20.6% leading the gains.  Strong performers for the month were Sibanye Stillwater, up 47.6%, Anglogold up 30.5%, Gold Fields up 24.3%, Impala, up 42.9%, Amplats, up 35.3%, and Northam, up 30.5%. The Property sector lost 1.2%, with Industrials weaker by 0.6%. Financials were the other positive sector, up marginally at 0.2% with Standard Bank the standout performer, up 10% for the month.