US Reciprocal Tariffs Hit the Global Markets

In the week gone by, global markets saw a sharp downturn following President Donald Trump’s sweeping reciprocal tariffs. In the U.S., the sell-off gained momentum as disappointing Manufacturing PMI and labor market data emerged. In this blog, we’ll know in detail what happened last week (March 31, 2025 to April 4, 2025) all across the globe.

US Economy Slumps

The S&P Global US Composite PMI climbed to a 2025 peak of 53.5 in March, buoyed by significant gains in the service sector. Yet, the S&P Global US Manufacturing PMI slumped to 50.2 – its weakest reading this year, pointing to a slowdown in industrial activity.

Compounding this, the U.S. Bureau of Labor Statistics’ JOLTS report showed job openings falling to 7.6 million, below expectations, raising alarm about labor market stability. Combined with the new tariffs, these indicators heightened fears of inflation and recession in the U.S.

Europe Neutral Stance

In Europe, the ECB’s recent cut to its main refinancing rate to 2.65% and its indication of a neutral policy stance offered some cushion. However, a 20% U.S. tariff on EU exports, declining manufacturing activity, and worsening business sentiment kept markets under pressure.

Eurozone inflation dropped to a four-month low of 2.2% in March, though rising monthly prices and stubborn services inflation have left the ECB split ahead of its April 17 meeting, with markets assigning a 65% likelihood of another rate cut.

China’s Market Remained Resilient

Chinese markets displayed comparative resilience, bolstered by a focus on domestic revenue. The Caixin China Manufacturing PMI rose to a four-month high of 51.2 in March 2025, marking six consecutive months of growth.

Optimism prevailed among manufacturers, with expectations that new products and promotional campaigns would drive sales and production over the next year. Still, the imposition of a 34% U.S. tariff on Chinese imports (totaling 54% with existing duties) led Beijing to promise retaliatory measures, highlighting China’s vulnerability to global trade shifts.

India Faced the Heat of Tariffs

Back at home, the Indian stock market faced sustained pressure this week, rattled by tariff shocks and global volatility. Export-reliant sectors bore the brunt of a 26% U.S. tariff on Indian goods. exacerbating market unease. A depreciating rupee, which slid to 85.78 against the dollar during the week, and persistent selling by foreign institutional investors (FIIs), further added to the market woes.

In the first week of April, Flls offloaded shares worth ₹10,246.51 crores, though domestic institutional investors (DIIs) countered with purchases of ₹7,352.88 crores, providing some relief. High-frequency economic data offered a silver lining.

In March, net GST collections surged 7.3% to ₹1.77 trillion, with FY 2025 totals rising 8.6% to ₹19.56 trillion, reflecting a robust domestic economy buoyed by strong consumer spending and seemingly shielded from global headwinds.

The HSBC India Composite PMI Output Index climbed to a seven-month high of 59.5 in March, driven by gains in both manufacturing and services, signalling dynamic private sector activity as firms reported a fresh wave of new orders.

Conclusion

Going forward, the market is expected to remain volatile, with multiple factors at play, ceasefire talks in the Russia-Ukraine conflict, escalating tensions in West Asia, the unfolding tariff war, and the upcoming March quarter corporate earnings.

Management commentary on future business strategies will also be pivotal in shaping investor sentiment amidst this uncertain landscape. So, open a free Demat account with SMC Global Securities and invest as per your investment objective and risk profile.

Reference:
SMC Global Securities’ Research Team

Author: All Content is verified by SMC Global Securities.