March Market Commentary

March Market Commentary by Levendi Investment Management – A Thornbridge Appointed Representative

A rather challenging quarter for the markets closed, with tariffs on everyone’s lips from Wall Street to Main Street. Uncertainty levels around the world rose markedly on the back of Trump threatening higher and higher tariffs on neighbours and allies to extract concessions. This has of course led to retaliations and threats compounding into the beginning of a chaotic trade war.

This has been reflected in the markets as risk assets saw drawdowns and higher levels of volatility, with the US, European and UK markets posting a -5.75%, -3.94% and -2.58% loss respectively. Amid the tariff escalation, Elon Musk has also taken a sledgehammer to a large number of government jobs and government spending. This has created an environment where stagflation, the unforgiving combination of stagnation and inflation, is being seen as a possible result if the Trump Administration does not reverse course in short order.

Giving bulls reasons to cheer however are a rather great US inflation print for February at 2.8%, and a resilient still labour market. The uncertainty created by this administration however is, despite the great reads, likely to lead Fed Chair Jerome Powell to stay put and study the effect of this administration’s actions before moving one way or the other.

Back in the UK a similar fall in inflation was seen but GDP figures are still falling short. The big surprise for the month however, from the Old World at least, comes from Germany. New German Chancellor Fredrich Merz with large support from MPs spearheaded the creation of a €500bn fund coupled with constitutional changes around debt. The special fund will invest in infrastructure and defence, boosting jobs and wage growth. The long shunned European Defence sector gaining the spotlight and seeing large rallies has been the silver lining of Trump alienating its allies, pushing Europe to question its position in a world with a different order. The bold move could see Europe being put back on the map in terms of productivity and growth, and potentially the Euro regaining some long-lost clout.

– Levendi Investment Management