Unpredictable

The current investment landscape is marked by significant volatility due to US President Donald Trump's unpredictable tariff announcements, which have heavily influenced investor sentiment. The announcement of a 90-day pause in tariff implementation is expected to bring some stability, as investors anticipate a clearer policy direction. This period of uncertainty has led to a risk-off environment, although some experts remain optimistic about future market stabilization.

In Europe, the market's recent turbulence has increased expectations for the European Central Bank (ECB) to reduce interest rates at its upcoming meeting. A 25 basis-point cut is widely anticipated, with ongoing discussions about the potential for a total of 75 basis points reduction throughout the year. This monetary policy adjustment is seen as a response to growing macroeconomic volatility and the associated downside risks to economic growth.

While the US faces inflationary pressures, Europe experiences a contrasting scenario with deteriorating growth prospects and minimal inflationary impact. This divergence provides the ECB with greater confidence in its inflation forecasts, supporting its continued rate-cutting strategy. The delayed positive effects of German fiscal spending, not expected until 2026, further underscore the ECB's cautious approach to stimulating economic growth.