WC 14/04/2025 – by Lloyd Adams, Investment Manager, Team Asset Management
Tensions between the US and China have escalated this week, with both sides raising tariffs on each other’s goods. China accused the US of “economic bullying” after Washington imposed 145% duties on some Chinese imports, prompting Beijing to raise tariffs on US goods to 125%. However, President Trump has exempted smartphones, computers, and other electronics from new China tariffs, easing pressure on tech firms. The White House says it gives time to shift production to the US. Although Beijing says it remains open to talks, optimism for a resolution has faded.
“Sell America” has become the new market mood, as confidence in the US takes a hit. Investors are growing wary of unpredictable policymaking, strained global partnerships, and a mounting debt burden. Despite noise around cost-cutting efforts from the Department of Government Efficiency, the focus has shifted to risk. The US dollar, once a safe haven, is now seen as a liability. Bond yields surged, with the 30-year Treasury posting its biggest weekly rise since 1982. Reflecting the shift in sentiment, the cost of insuring against a US default now exceeds that of France, Spain, or South Korea.
Across the Atlantic, the European Union has paused its planned retaliatory tariffs on US goods for 90 days, following President Trump’s temporary reduction of duties on imports. The EU had been preparing tariffs in response to US levies on steel and aluminium; however, EU leaders now want to give talks a chance, though they warn that if negotiations fail, countermeasures will follow.
Meanwhile, the Gulf states—like Saudi Arabia and the UAE—are better placed than most to weather the impact of US tariffs, thanks to their deep pockets and strong ties with Washington. However, falling oil prices could still put pressure on government budgets and spending plans, as these economies remain heavily reliant on energy revenues. Experts argue that the direct impact of Trump’s tariffs on the region should be limited, as the US isn’t a major buyer of Gulf exports.
Back in the US, inflation eased more than expected in March, with consumer prices dropping 0.1% for the month. This was partly due to a fall in energy prices, with gasoline costs dropping sharply. Core inflation, which excludes food and energy, remained steady at 2.8%.
The UK economy grew by 0.5% in February, beating expectations, thanks to a strong performance in services and production. This recovery followed a disappointing start to the year, with January’s growth revised to flat. However, concerns remain, as the country braces for the impact of new US tariffs of at least 10%. The uncertainty is overshadowing the positive data, making it more likely the Bank of England will cut interest rates in May.
It’s been a good week for America’s big health insurers. After a tough few months, the sector is rebounding, helped by news that the government will raise reimbursement rates for Medicare plans more than expected next year. Shares in UnitedHealth, Humana and other sector constituents all moved sharply higher.
It’s been a tough week for Nike, with shares down as the trade war ramps up. The sportswear giant is particularly exposed, as most of its manufacturing is based in Asia—especially China—making it vulnerable to rising tariffs and supply chain disruption.
Base metals had a volatile week. Copper prices fell to their lowest since November on fears of weaker demand, as the metal is essential to construction, manufacturing and electronics. In contrast, gold hit record highs, enjoying its best week since the depths of the COVID pandemic, as investors turned to safe-haven assets amid rising recession fears, tariff tensions and a softer US dollar.
Bitcoin held steady this week, showing unexpected resilience amid broader market swings. Often seen as a riskier asset, it stayed within a narrow range and even posted a modest gain. Looking to this week, focus turns to the European Central Bank, widely expected to cut interest rates on Thursday, and a fresh wave of international company earnings. Heavyweights including Goldman Sachs, Johnson & Johnson and LVMH, will report, offering their latest guidance on how businesses are coping.
