European Stocks falter while the U.S. market follows them down. The TPP midweek update.

Before today, the US market was bouncing back. Mainly because of how far they'd fallen. However, as the day/Evening is progressing they're struggling to hold onto last weeks gains.

A bounce, even if it’s brief, was inevitable, we just didn’t know when, we also don’t know if it will last. They are still on a knife’s edge and Trump is mercurial to say the least. We all hope that the rally continues, but it is hard to see good reason for it at the moment as nothing has really changed. There is a glimmer of hope in Ukraine and a very small chance that the tariffs aren’t as bad as feared; this hope means the US markets may have found a bottom for now.

“Uncertainty on the tariff front remains ridiculously high, leaving it incredibly tough for businesses or consumers to plan more than about a day into the future, and still making it nigh-on impossible for market participants to price risk,” said Michael Brown, a strategist at Pepperstone Group Ltd.

An added layer of uncertainty stems from the global economy, which many analysts fear is slowing down even as inflation remains broadly elevated. Growth concerns were fanned further on Tuesday by US data showing consumer confidence at a four-year low. A reading of durable goods orders on Wednesday came in stronger than expected, though it slipped from the previous month.

The fear of a sharp economic downturn is hampering US equities from rebounding decisively after the recent four-week selloff, with growth-linked technology names under most pressure. The S&P 500 is set for its worst first-quarter performance in three years, with record underperformance versus European stocks in dollar terms. The Stoxx 600, meanwhile, is on track for its best quarter since end-2022. Sell the U.S. and buy Europe has been the recent theme, but this too may be running out of steam.

European stocks have mostly moved sideways this week, and all major European indices are now down over the last 5 sessions. The FTSE 100 is holding onto its name for being less volatile, only dropping -0.38% while the DAX is down -0.57% and the CAC -0.74% over the same period. Nothing drastic, but nothing gained.

In the U.K., Rachel Reeves delivered her spring statement today and on the whole, it has been well received.

She made up a few numbers that are very hard to predict, such as forecasting economic growth to be 1 per cent in 2025, half the forecast in October, but upgraded it to 1.9% in 2026 and 1.8% in 2027, 1.7% in 2028 and 1.8% in 2029. Why they bother doing this is anyone’s guess, but saying 1.8% seems a pretty safe bet and close to the long-term average.

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Inflation is forecast to be 3.2 per cent in 2025, up from 2.6 per cent forecast in October, falling to 2.1 per cent in 2026, and returning to the Bank of England’s 2 per cent target from 2027. Nobody has got this right in the last few years so we’re not sure we’d pay too much attention to this either.

Fiscal headroom is projected to be £9.9bn in 2029-30, unchanged from October’s forecast. The current budget is forecast to turn into a surplus of £6.0bn in 2027-28, £7.1bn in 2028-29, and £9.9bn in 2029-30.

Day-to-day spending is on track to be matched by revenues by 2029-30, in line with the government’s “stability rule”. Public sector net financial liabilities are expected to fall as a share of GDP by 2029-30, meeting the government’s “investment” rule.

“There is nothing progressive about working people paying the price of economic irresponsibility,” Reeves said. “The British people put their trust in this government because they knew that we would never take risks with the public finances.”

The chancellor has cut back government expenditure to ensure she meets her key fiscal rule, which requires day-to-day spending to be covered by tax receipts in the years ahead. Her previous headroom was wiped out by growth downgrades and higher borrowing costs.

The pound held on to earlier losses while gilt yields remained lower as Reeves spoke. They had both fallen after UK inflation data earlier Wednesday came in softer than economists had forecast.

The pound traded 0.3% weaker at $1.288 while 10-year gilt yields were three basis points lower at 4.73%.

The problem with making any projections right now is that nobody knows what will happen with tariffs. If they are implanted, then they are inflationary and could stunt growth. Nobody knows exactly what Trump is going to go through with, so it’s all still up in the air.

Currently, he seems to be dialling them down a touch. He said that they might be more “lenient than reciprocal,” as the April 2 tariff deadline looms for a number of levies to go into effect.

“I’ll probably be more lenient than reciprocal, because if I was reciprocal, that would be very tough for people,” Trump said Tuesday in an interview with Newsmax.

“I know there are some exceptions, and it’s an ongoing discussion, but not too many, not too many exceptions,” the president added.

The comments come as investors worry that a more severe approach signalled by the Trump administration would dampen consumer and corporate sentiment enough to slow down the U.S. economy. On Tuesday, the Conference Board said its measure for consumer expectations on business, income and labour dropped to a 12-year low.

Oil rose after an industry report signalled a chunky decline in US crude stockpiles, while the market weighed the prospect of a Russia-Ukraine ceasefire in the Black Sea.

West Texas Intermediate futures climbed close to $70 a barrel, a level not seen since the start of the month. US inventories fell by 4.6 million barrels last week, according to the American Petroleum Institute. That would be the biggest draw since November if confirmed by official data on Wednesday.

The US, meanwhile, said Russia and Ukraine had agreed to a truce “to ensure safe navigation” in the Black Sea, even as the Kremlin said its involvement would depend on preconditions including sanctions relief.

Some of the world’s top traders on Tuesday reiterated a pessimistic outlook for the rest of this year, but cautioned that OPEC+ output policy and President Donald Trump’s trade and sanctions plans can change that.

Oil is “supported by a US stockpile drop and risk to supply on stepped up sanctions,” said Ole Hansen, head of commodities strategy at Saxo Bank. “Some are considering the prospect for increased supply from Russia should a peaceful solution be reached. However, I believe that’s more a gas story than oil given the current OPEC+ quota system.”

Oil is still down almost 15% from this year’s peak in mid-January as US tariffs and retaliatory measures from targeted nations inject volatility into global markets. More levies are coming next week, including a duty on buyers of Venezuelan crude and gas.

Traders have been snapping up bullish oil options to hedge against the risk that US sanctions will cause prices to spike. President Trump has also vowed “maximum pressure” against Iran to curb its crude exports.

Despite equity markets moving sideways at the moment TPP portfolios have had a good couple of weeks. A bit of volatility is good for trading and good for clients. Long may it continue.

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On our platform:

After a recent solid period, many of our strategies have taken profit and reduced exposure again. Our trackers continue to track, but many of our 'long or flats' are now flat currently. They're waiting for an opportunity to enter the markets, and if todays retracement continues they might find an opportunity. The active strategies have also taken a plethora of profit as of late, and similar to our long or flats, they seem to be waiting for a clearer market direction before making their move.

It's been a solid Q1 for the majority of TPP strategies, and it would be nice to end the month and quarter on a high.

We expect this market volatility to continue to work in our favour moving forward.

If you are an investor and are frustrated with your wealth manager and the performance you're receiving, then don't hesitate to reach out to our team for an absolutely FREE consultation call.

We'd love to explore whether we can assist you to build a benchmark beating portfolio.

Disclaimer: The views expressed in this article are the author’s own and should not be considered in rendering any legal, business or financial advice.

Past performance may not be indicative of future results. Therefore, you should not assume that the future performance of any specific investment or investment strategy will be profitable or equal to the corresponding past performance.

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