Trade Jitters Resurface: Global Equity Funds' Rollercoaster Ride

The global equity market has been on a rollercoaster ride, with investors initially buoyed by optimism over President Donald Trump's administration's selective tariff approach, only to be thrown into a tailspin by renewed trade jitters. The week through March 26, 2025, saw global equity funds attract a staggering $35.43 billion in net inflows, a stark contrast to the previous week's net sales of $29.49 billion. This surge in investment was driven by the belief that the administration would apply tariffs more selectively, avoiding the broad trade restrictions that had previously sent shockwaves through the market.

The MSCI World Index (.MIWD00000PUS) reflected this optimism, recovering as much as 4.26% after hitting a six-month low of 819.94 on March 13, reaching a two-and-a-half-week high of 854.88 on Tuesday. Investors saw this as a more measured and less disruptive strategy, which could mitigate the negative impacts on global trade and economic growth. This optimism was further bolstered by the expectation that targeted tariffs could be more effectively negotiated and resolved, reducing the risk of prolonged trade conflicts.



However, this optimism was short-lived. Later in the week, President Trump announced a 25% import tax on foreign-made vehicles and auto parts, rekindling investor concerns over a potential full-scale trade war. This announcement led to a slight decline in global equities, highlighting the sensitivity of investor sentiment to trade policy developments. The MSCI World Index, which had been on an upward trajectory, began to reverse course, underscoring the fragility of the market's recovery.

The impact of this event on global equity funds and broader market sentiment was significant. U.S. equity funds recorded net weekly inflows of $22.44 billion, reversing sharply from net outflows of $33.53 billion the previous week. European and Asian equity funds also attracted strong investor interest, with net inflows of $6.84 billion and $4.36 billion, respectively. Technology led the sectors with $1.32 billion in inflows, followed by financials and industrials at $802 million and $754 million, respectively.



The resurgence of trade jitters among investors was primarily triggered by President Donald Trump's announcement of a 25% import tax on foreign-made vehicles and auto parts on Wednesday. This announcement rekindled investor concerns over a potential full-scale trade war. The impact of this event on global equity funds and broader market sentiment was significant. Initially, global equity funds had attracted large inflows of $35.43 billion in the week through March 26, driven by optimism that President Trump's administration would apply tariffs more selectively rather than impose broad trade restrictions. However, following the announcement of the import tax, global equities turned slightly lower later in the week. This shift in sentiment was reflected in the MSCI World Index, which had recovered as much as 4.26% after hitting a six-month low of 819.94 on March 13, reaching a two-and-a-half-week high of 854.88 on Tuesday. The subsequent announcement led to a reversal in this upward trend, highlighting the sensitivity of global equity markets to trade-related uncertainties.

The rollercoaster ride of the global equity market serves as a stark reminder of the volatility and unpredictability that can arise from trade policy developments. Investors must remain vigilant and adaptable in the face of such uncertainties, as the market's response to trade jitters can be swift and severe. The selective tariff approach initially provided a glimmer of hope for a more stable and predictable trading environment, but the resurgence of trade tensions has once again thrown the market into disarray. As the global economy continues to navigate these choppy waters, investors will need to stay informed and agile, ready to pivot their strategies in response to the ever-changing landscape of international trade.