The last several trading days have been extremely volatile for global markets, with US President Donald Trump unveiling a harsher set of tariffs than expected on “Liberation Day”. The S&P 500 index in the US fell 10.5 per cent in the two days following the initial announcement. It’s been slightly calmer since then, but investors are still on edge. What have we seen across some of the key asset classes, and where might things be headed from here?

It was an extremely volatile week for global markets, as "Liberation Day" sent investors into a tailspin. Investors will be watching for signs of further tariff retaliation (or negotiation) this week, while US inflation figures will in focus . Another OCR cut its widely expected here in New Zealand, and on the corporate front the quarterly international earnings season kicks off with some of the US banks on Friday.

The March quarter of 2025 is behind us and if it’s any guide of things to come, we’re in for an eventful year! The quarter was punctuated by policy uncertainty, shaky confidence readings and volatile markets. Which asset classes and markets were up, down or sideways, and what should investors be watching out for over the coming three months?

The focal point of this week will be the details of US reciprocal tariffs, which are scheduled to be implemented on Wednesday (April 2). A day later, 25% tariffs on cars imported into the US will take effect. It is unclear whether the reciprocal tariffs will be broad or targeted, but the prospect of added inflationary pressures and a tariff-induced economic slowdown will keep investors on edge. In terms of global economic releases, highlights will be the US jobs report and ISM indices, while here in New Zealand the latest ANZ Business Outlook survey will take centre stage.

Last week's gross domestic product (GDP) report was comforting, coming in above expectations and pointing to the strongest improvement in 18 months. That was a welcome piece of good news, following a difficult February reporting season littered with cautious comments from management teams. In contrast, business confidence measures have rebounded strongly, which seems out of step with the downbeat tone we're seeing elsewhere. So what gives, and why are we getting mixed messages from some of our key economic indicators?

Global flash PMIs for March will be a focal point early in the week, while PCE inflation will be one of the US highlights. The Conference Board’s US consumer confidence index will be of interest on Tuesday too, following a slide in the University of Michigan measure last week. Australia's 2025/26 Federal Budget will be delivered on Tuesday evening, paving the way for the Federal Election which must occur on or before 17 May. Locally, it's a quiet week with ANZ consumer confidence for March the only notable release.

Central banks will be in focus this week with monetary policy decisions due in the US, Japan and the UK. The Fed will be the obvious highlight and although no change to interest rates is expected, markets will be interested in the commentary and a fresh set of projections. Locally, the main event will be December quarter gross domestic product (GDP), which is due Thursday. The economy has contracted for eight consecutive quarters (on a per capita basis), and we're hoping for early signs of improvement.

As of yesterday’s close, the S&P 500 in the US is down 10.1 per cent from its February highs. A fall of more than ten per cent is generally considered a market correction, and we’re officially in one of those now. Our crystal ball isn’t any better than yours, and we’d be lying if we said we know exactly where things go from here. However, here are four things keeping us from getting too negative too early.

After two consecutive years of 25 per cent plus returns, the S&P 500 index in the US is down 2.5 per cent this year as investors fret over tariffs. However, there’s always a bull market somewhere and right now, that seems to be in Europe. European shares are up ten per cent this year, led by German shares which have surged 15.6 per cent. That’s the best start to a year in at least a decade, but the question now is whether those gains will keep on coming.

This week's highlight will be the February inflation report in the US, with the University of Michigan survey also in focus amidst weakening confidence and rising inflation expectations. Developments on the tariff front will also have a big impact on market sentiment. On Monday, China is set to impose tariffs of up to 15% on various US imports, while the US set to impose steel and aluminium tariffs of 25% on the European Union from Wednesday. Canada will be in the spotlight too, with the governing Liberal Party set to announce a replacement for Justin Trudeau in a leadership vote on Sunday. This comes at a volatile time, ahead of the Canadian general election which must be held by October.

Every once in a while, you hear talk of how much worse off you’d be if you’d missed the ten best days in a given period. It usually happens during a rough patch, in the hope it’ll calm investors down and ensure they stay the course rather than panicking and selling at precisely the wrong time. The numbers are always compelling, and it's admirable advice. However, there's one important point that is often missed.

Term deposit investors have had it pretty good in recent years, but that’s changing quickly and many savers are on borrowed time. Interest rates are headed lower, and those sitting comfortably on the sidelines should prepare for that. If they take too long, they’ll not only miss opportunities elsewhere but they’ll be facing a hefty fall in income.

The German election will be a highlight of the international week, with the first results due early Monday morning here in New Zealand. The key release in New Zealand will be the ANZ Business Outlook, due on Thursday. The Australasian earnings season continues this week, and it'll be another busy one with a raft of companies scheduled to report. It's a quieter week on the international earnings front, although Home Depot and Salesforce will release earnings results, as will NVIDIA.

We’re a month into President Trump's second term and there’s 47 more to go, which means investors need to make peace with a less predictable market backdrop and get on with it. While sitting on the sidelines for the next four years is one strategy, it’s unlikely to be a very good one. Don't forget, the S&P 500 increased 58 per cent during Trump’s first term despite plenty of twists and turns, and there’s every chance you’ll be rewarded for keeping your cool this time around too.

This week’s economic highlight will be the global flash PMIs for February, which are due on Friday. Last month these pointed to a good start to year for the global economy, and we'll be watching for further improvements, particularly in Europe. There'll be plenty of action in this part of the world too. Another 50-basis point cut to the OCR is expected here in New Zealand on Wednesday, while we're also expecting the first rate cut of this cycle across the Tasman, which would be an important milestone for the Australian economy and sharemarket.

The local reporting season begins this week, and we've got high hopes for a more optimistic tone. It’s been a very difficult couple of years for most businesses, but things are getting better. The period this reporting season will cover is close to the maximum pain point for our economy, but there are plenty of bright spots emerging. Investors should brace themselves for another batch of uninspiring results, while putting more emphasis on the encouraging comments we hope to hear about how this year is shaping up.

Looking ahead, this week’s economic highlights will include the latest inflation report in the US, as well as the NFIB survey and the retail sales report for January. On the central banking front, investors will be watching the semi-annual testimonies by Federal Reserve Chair Jerome Powell to the Senate Banking Committee and the House Financial Services Committee on Tuesday and Wednesday. Investors will also be watching for more tariff talk, after US President Donald Trump said he was planning reciprocal tariffs on US trading partners, which would mean raising the level to match what the US is charged by others.

The OCR has fallen from its peak, but unemployment is up and it still feels like we're in recession. Meanwhile, the currency is in a slump and we're facing international challenges as tariffs threaten to derail the global growth story. Can we still expect the economy to recover, how long will we need to wait for lower mortgage rates to have an impact, and are there any bright spots on the horizon?

Fixed income can provide investors with a stable, reliable income stream for a modest level of risk. If you’re staring down the barrel of sliding term deposit income, it might be a great solution that’s worth a look. For most private investors, a mix of New Zealand government or local authority bonds, combined with investment-grade corporate bonds is the optimum approach. Subordinated and hybrid securities can be a useful complement, but make sure you understand the nature of these and keep your weightings in check. For smaller investors, diversified fixed income or bond funds might be a very useful option.

This week, the focus will be on President Trump's tariffs, how markets react and whether we see any retaliation from major US trading partners. Key economic releases in the US this week will include the jobs report, the ISM indices and the University of Michigan's consumer sentiment index. The global earnings season will be in focus again, with more than 100 S&P 500 companies due to report including Alphabet and Amazon. Here in New Zealand, the highlight will be the labour force report on Wednesday, which is expected to see unemployment rise above 5 per cent for the first time in more than four years.