Volatility is the theme of the week. The TPP midweek update.

Volatility is the theme of the week.

With the tariffs on their way, nobody is quite sure how it’s all going to pan out, so hold tight.

The FTSE 100 was slightly down around 8,600 on Wednesday, as market participants braced for President Donald Trump's announcement of sweeping new reciprocal tariffs on global trading partners later today. Among equities, GSK and AstraZeneca were among the biggest fallers, mirroring an overnight decline in major US pharmaceutical stocks. Housebuilders also struggled, with Persimmon, Barratt, and Taylor Wimpey leading the sector’s decline.

On the FTSE 250, Raspberry Pi Holdings shares climbed 7.5% to 506p after it published the first set of full-year results following its London IPO last year and said it expected a “steady build-up in demand” through 2025. In corporate news, convenience good giant Greencore has reached an agreement with its rival Bakkavor about the terms of a £1.2 billion takeover, after two failed offers, which would create a convenience foods giant with combined turnover of about £4 billion.

Frankfurt's DAX traded lower around 22,300 on Wednesday, in line with most of European peers. European markets are awaiting more clarity on the tariffs and the fear of the unknown is creating stocks to falter. The new duties are set to take effect immediately after Trump announces them, with reports suggesting a 20% universal tariff on most imports, while a separate 25% global tariff on auto imports will be implemented. Investors fear that the tariffs could lead to higher inflation and slower economic growth. Most sectors notched declines, led by pharmaceuticals, tech and auto stocks.

The CAC 40 in France fell 0.6% to 7,828 on Wednesday, reversing the 1.1% gain from the previous session. Among individual stocks, Sanofi led the decliners with a 3.7% drop, followed by BNP Paribas, which saw a 2.6% decrease, Societe Generale falling 2.5%, and Airbus down 2.1%. On a positive note, Engie was the standout performer, rising 1.4% to its highest level since June 2015, after Jefferies upgraded the stock to "buy" from "hold." The upgrade was driven by Engie’s more compelling equity story, with visible earnings growth and manageable challenges ahead.

Annual inflation in the Euro Area eased to 2.2% in March 2025, the lowest rate since November 2024 and slightly below market expectations of 2.3%, a preliminary estimate showed. Services inflation slowed to a 33-month low (3.4% vs. 3.7% in February), while energy costs declined (-0.7% vs. 0.2%). However, inflation remained steady for both non-energy industrial goods (0.6%) and processed food, alcohol & tobacco (2.6%), and unprocessed food prices surged (4.1% vs. 3.0%). Meanwhile, core inflation, which excludes volatile food and energy prices, fell to 2.4%, slightly below market forecasts of 2.5% and marking its lowest level since January 2022. On a monthly basis, consumer prices rose 0.6% in March, following a 0.4% advance in February.

This is good news for the European Central Bank as they may need to lower rates once again especially if the economy is negatively affected by the new trade tariffs.

Over in the US, markets slid over 1% once again, before the S&P 500 wiped out losses Wednesday amid solid factory data.

Tesla’s vehicle sales fell 13% in the first quarter, dragged down by the changeover of its most important model and international backlash against Elon Musk. The automaker said today it delivered 336,681 vehicles in the first three months of the year, the lowest since the second quarter of 2022. Analysts on average were expecting the company to sell more than 390,000 cars and trucks, based on estimates compiled by Bloomberg.

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Tesla then reversed its plunge led gains in megacaps on a news report that Trump told his inner circle Elon Musk will step back from his advisory role. A separate report said Amazon was said to make a bid to buy TikTok in the US, sending the shares higher. Banks rallied, with Goldman Sachs Group and Morgan Stanley each rising over 2%. Bonds dropped alongside the dollar.

So, now it’s just a waiting game. Trump will tell us more shortly. A handful of traders think the Trump announcement will be a “buy the news” event as it removes a bit of uncertainty. Andrew Brenner at NatAlliance Securities is betting the “bark will be worse than the bite.” At Fundstrat Global Advisors, Thomas Lee points to evidence that Trump cares about stocks, and a positive reaction would be a validation of his negotiations.

Oliver Blackbourn at Janus Henderson Investors notes that with all the concern about the impacts of tariffs on the economy, US equities are still relatively expensive. To Matt Maley at Miller Tabak, even if the announcement gives stocks a near-term boost, the market will possibly have to see a move below the March lows to fully “price in” the fundamental backdrop this year.

“While today’s tariff revelations might offer investors some additional clarity from which to reassess the economic implications from Trump’s attempts to restructure the global trade landscape, the developments are unlikely to offer anything definitive,” said Vail Hartman and Ian Lyngen at BMO Capital Markets. “As a result, elevated uncertainty and volatility should emerge.”

All bets are off the table until we know more. The market moves are working well for a number of TPP strategies that are designed to benefit from the volatility. We hope this continues but it’s been a solid 2025 so far for our portfolios.

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