By Jamie McGeever
ORLANDO, Florida (Reuters) – TRADING DAY
Late push lifts Nasdaq to first gain in 5 weeks
Many of the world’s major central banks sent a strong message this week that the uncertainty caused by U.S. President Donald Trump’s trade wars is weighing on growth, stoking inflation, and dramatically reducing visibility on the interest rate outlook.
It’s a highly unpredictable and nervy environment for investors to navigate, as reflected by the lack of clear direction across world markets this week.
The MSCI World equity index snapped a four-week losing streak for a rise of 0.7%, the S&P 500 rose 0.5%, the Nasdaq eked out a gain of 0.17% – just avoiding its worst run since the 2022 bear market – while European stocks gained more than 1% for their best week in five weeks.
U.S. high yield credit spreads tightened from the previous week’s six-month wides but gold rose, while Treasury yields edged lower yet the dollar crept higher.
Those hoping for more clarity on the political, policy or data fronts next week may be disappointed – trading could be every bit as messy and lacking in direction, especially with the end of the quarter approaching.
It’s not just quarter end looming either – attention is also turning to April 2, when President Trump is expected to announce more tariffs, including reciprocal levies on many countries.
As policymakers made clear this week, the uncertainty is weighing on businesses and consumers, and potentially putting a freeze on investment, hiring and spending. Investors may decide to put their plans on ice too.
One of the strongest investment trends this year has been the reallocation of capital out of Wall Street to markets overseas. U.S. stocks have underperformed the rest of the world by around 13 percentage points.
Europe has been a particular beneficiary of these flows due to Germany’s historic fiscal policy shift that may substantially boost German – and euro zone – growth. But how much juice is left in that transatlantic swing and the reversal of the ‘U.S. exceptionalism’ trade, at least in the near term?
European Central Bank President Christine Lagarde warned that the immediate outlook is gloomy thanks to the trade fog. And stateside, Fed officials Austan Goolsbee and John Williams on Friday drove home the stagflation warnings that the U.S. central bank made earlier in the week.
Next week promises to be just as nervy. And foggy.
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