Invest
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Invest
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Global equity and bond markets have experienced a turbulent start to 2025, primarily due to concerns that a potential tariff-driven trade war could heighten inflation and recession risks.
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Global equity and bond markets have experienced a turbulent start to 2025, primarily due to concerns that a potential tariff-driven trade war could heighten inflation and recession risks.
However, a pause on most tariffs has diminished those concerns, according to State Street Global Advisors' 2025 Midyear Global Market Outlook released on Monday.
The investment management firm said it retained a cautious outlook, emphasising diversification of exposures and staying alert for opportunities during any drawdown periods.
State Street Global Advisors global chief investment officer Lori Heinel said much had changed since the beginning of the year.
"After a turbulent period that saw episodic swings in both equities and bonds in response to wide-ranging executive orders and the announcement of higher-than-expected tariffs, financial markets have since stabilised with the tariff imposition paused to allow for trade negotiations," she said.
The firm said there was now greater confidence that tariff levels would settle well below the original headline levels that spooked markets.
State Street maintained its growth forecasts and projections for central bank rate cuts, while recognising that tariffs at the lower end of the range would likely still bring some inflationary pressures in the US.
The firm said Europe's pledge to spend more on infrastructure and defence was a positive, bolstered by Germany easing its limits on government borrowing.
State Street chief economist Simona Mocuta said the firm did not anticipate a US recession, with European growth forecasts little changed and global growth expected to hover near trend.
"The 90-day delay in reciprocal tariff implementation (initially excluding China) is just one example; the changes to the Ukraine minerals deal that ultimately allowed for its signing is another," she said.
"The start of US-China talks suggests the potential for significant easing in that tit-for-tat tariff war as well."
Ms Mocuta said something especially important and positive had emerged from the chaos of recent months - the reform of the German debt brake.
"It speaks to a narrowing of the US growth outperformance and a more balanced global growth distribution, both of which are welcome," she said.
State Street head of macro policy research Elliot Hentov said the balance of risks had changed more dramatically than forecasts.
"The path to a soft landing was quite wide three months ago; it has since narrowed considerably. But it remains open," he said.
The firm said the bond market would be sensitive to US debt sustainability considerations, with the Trump administration promising a pro-growth agenda centred around fiscal stimulus.
For equities, State Street said uncertainty clouded the outlook as policy from Washington and broader geopolitical developments left unanswered questions.
The firm said fundamentals did not favour European equities, despite their strong start to 2025, while the US was hovering around a 9 per cent earnings growth estimate in 2025.
In fixed income, State Street retained its constructive view despite a turbulent start to the year for many bond markets.
For commodities, the firm held an optimistic view on precious metals, particularly gold, saying the main forces that had driven gold prices higher remained active.
State Street manages $4.7 trillion in assets under management globally.
RELATED ARTICLES
Economy
Navigating the inflation maze: How CFOs can outsmart economic hurdles in Australia
Fresh inflation data have cooled expectations of near-term rate cuts in Australia, intensifying pressure on margins, capital allocation and demand. Rather than wait for monetary relief that may not ...Read more
Economy
Inflation concerns rise as Australia's CPI climbs to 3.8% in October
Australia's latest Consumer Price Index (CPI) figures have sent ripples through the economy, with headline inflation accelerating to 3.8% year-on-year in October, up from 3.6% in September. The data, ...Read more
Economy
October CPI results pose challenges for RBA’s monetary policy stance
In a surprising turn of events, the October Consumer Price Index (CPI) data has raised eyebrows among economists and market strategists, revealing stronger-than-expected inflationary pressures in ...Read more
Economy
Global deal activity declines by 6% amid economic uncertainty, reports GlobalData
In a year characterised by economic turbulence and evolving market conditions, global deal activity has witnessed a notable downturn during the first ten months of 2025. According to GlobalData, a ...Read more
Economy
Australia’s softening labour market puts another RBA cut in play — here’s what business should do now
A four-year high in unemployment has revived expectations the Reserve Bank could deliver another rate cut as soon as November. With quarterly GDP growth running at 0.6 per cent and annual growth at ...Read more
Economy
Rising CPI reinforces RBA’s stance as rate cut expectations remain: State Street
State Street Global Advisors says the Reserve Bank of Australia (RBA) is likely to hold its current policy outlook following the release of September quarter inflation data, which showed an unexpected ...Read more
Economy
NSW SES boosts tsunami preparedness ahead of World Tsunami Awareness Day
As World Tsunami Awareness Day approaches on 5 November, the New South Wales State Emergency Service (NSW SES) is ramping up efforts to enhance tsunami preparedness along the east coastRead more
Economy
Lifesaving Regional Response Strengthened with New NSW SES Vehicles
In a significant boost to regional emergency services, the NSW State Emergency Service (SES) has unveiled 11 new Community First Response (CFR) vehicles, designed to enhance the speed and safety of ...Read more
Economy
Navigating the inflation maze: How CFOs can outsmart economic hurdles in Australia
Fresh inflation data have cooled expectations of near-term rate cuts in Australia, intensifying pressure on margins, capital allocation and demand. Rather than wait for monetary relief that may not ...Read more
Economy
Inflation concerns rise as Australia's CPI climbs to 3.8% in October
Australia's latest Consumer Price Index (CPI) figures have sent ripples through the economy, with headline inflation accelerating to 3.8% year-on-year in October, up from 3.6% in September. The data, ...Read more
Economy
October CPI results pose challenges for RBA’s monetary policy stance
In a surprising turn of events, the October Consumer Price Index (CPI) data has raised eyebrows among economists and market strategists, revealing stronger-than-expected inflationary pressures in ...Read more
Economy
Global deal activity declines by 6% amid economic uncertainty, reports GlobalData
In a year characterised by economic turbulence and evolving market conditions, global deal activity has witnessed a notable downturn during the first ten months of 2025. According to GlobalData, a ...Read more
Economy
Australia’s softening labour market puts another RBA cut in play — here’s what business should do now
A four-year high in unemployment has revived expectations the Reserve Bank could deliver another rate cut as soon as November. With quarterly GDP growth running at 0.6 per cent and annual growth at ...Read more
Economy
Rising CPI reinforces RBA’s stance as rate cut expectations remain: State Street
State Street Global Advisors says the Reserve Bank of Australia (RBA) is likely to hold its current policy outlook following the release of September quarter inflation data, which showed an unexpected ...Read more
Economy
NSW SES boosts tsunami preparedness ahead of World Tsunami Awareness Day
As World Tsunami Awareness Day approaches on 5 November, the New South Wales State Emergency Service (NSW SES) is ramping up efforts to enhance tsunami preparedness along the east coastRead more
Economy
Lifesaving Regional Response Strengthened with New NSW SES Vehicles
In a significant boost to regional emergency services, the NSW State Emergency Service (SES) has unveiled 11 new Community First Response (CFR) vehicles, designed to enhance the speed and safety of ...Read more
