A small spring in the step for global stock markets

Key takeaways

There was a welcome (albeit petite) ripple of optimism in markets last week, alongside the official start of spring in the Northern Hemisphere. The prices of riskier assets, like shares, rose slightly in an otherwise challenging patch for global stock markets.

A gentler week for share prices
A mixture of influences improved the mood among stock market investors last week, including Friday’s assurance of ‘flexibility’ on tariffs by President Trump. This allowed the US stock market (measured by the S&P500 Index) to eke out a positive result for the week, on the heels of weeks of market performance in the red. The opening months of 2025 have provided a very jumbled picture for global stock markets, with Europe the standout performer, while the US lags significantly behind.

Interest rates held steady in the US and UK
UK and US central banks both opted to keep interest rates at their current levels last week. Policymakers at central banks around the world are currently trying to balance threats to economic growth (including tariff wars) against stubbornly persistent inflation. It’s too soon to say whether or not Trump’s tariffs (and the tit-for-tat responses to these levies) will push inflation higher from here, but the uncertainty created around the cost of global trade is certainly lowering expectations for economic growth in the meantime. This in itself could influence the journey ahead for interest rate decisions at central banks, where policymakers typically have a responsibility to support growth in their domestic economies.

Green shoots of growth in Europe
Last week saw the presumed incoming German chancellor – Friedrich Merz – pass his €1trn spending package through Germany’s outgoing parliament. While positive signs of growth had already been appearing in Europe prior to Merz’s plans, this boost for infrastructure and defence investment has added momentum. Nascent signs of growth are visible in various sources, including business surveys and measures of change in economic data. For this to continue, though, Europe will likely need to enact structural changes over the medium and long term to secure a pattern of ongoing growth.

Market moves

• In a better week for financial markets, European share prices paused for breath while the US saw a patch of welcome recovery.

• UK government bonds wavered in the run up to the government’s Spring Statement later this week.

• The gold price continued to break new ground, reaching new record highs as investors and central banks turn to this traditional ‘safe haven’.

What to look out for this week

• The UK government’s Spring Statement will be delivered on Wednesday, with Chancellor Reeves attempting to balance a range of factors, from the hole in UK public finances and anaemic UK economic growth, to the moving target of President Trump’s global tariff policies and the Russia-Ukraine war.

• The US central bank’s preferred measure of US inflation – the Personal Consumption Expenditures (PCE) Price Index – is due for release on Friday.

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