U.S. stocks ended the week on a positive note, with the S&P 500 and Nasdaq 100 both moving higher on Friday to snap a 3-day losing streak. This allowed the major indexes to finish the week nearly flat despite falling in the early part of the week. Better than expected U.S. services PMI data helped boost sentiment on Friday.

The Federal Reserve left interest rates unchanged at its latest policy meeting as widely expected. However, the Fed did revise its economic projections, lowering GDP growth forecasts for 2025 while raising its inflation outlook. This suggests the Fed sees the economy slowing with inflation proving stickier than previously thought. Bond markets were relatively calm with rates drifting up by 5-10 bps around the world. 

The Bank of Japan also kept rates steady last week at 0.5%. BoJ Governor Ueda provided no guidance on the timing of future rate hikes and highlighted rising global economic uncertainty stemming from U.S. trade policies.

In commodity markets, oil prices climbed with WTI crude settling above $72 per barrel. Reports that the U.S. is considering emergency tariffs on Russian oil imports helped support prices. Gold hit a new record high above $3000/oz early in the week before pulling back. The precious metal still finished the week up over 1%.

Economic data was mixed. Flash PMIs showed U.S. manufacturing activity slowing in March while service sector growth accelerated. The opposite was true in Europe and German business expectations surprisingly improved. U.S. consumer confidence fell more than expected, extending a string of increasingly negative sentiment indicators. UK inflation also remained elevated at 3% in February.

Overall, markets seemed to breathe a small sigh of relief late last week as worst case fears regarding U.S. tariffs weren't realised. The tug-of-war between slowing growth and modest but stubborn inflation also persists. Investors will be closely monitoring upcoming PCE inflation data and remaining March PMI reports this week for further clues on the economic trajectory. And of course, as the April 2 tariff deadline approaches, headlines out of Washington will be in sharp focus.

Closer to home the Australian budget was met with a ‘meh’ from markets reflecting a steady as she goes approach form the incumbent government as they tentatively lead the polls.  Treasurer Jim Chalmers described the 2025 Federal Budget as one of “repair, relief and reform,” unveiling a forecast $42.1 billion deficit for 2025–26 alongside measures aimed at easing cost-of-living pressures, strengthening healthcare, and boosting housing affordability​. This pre-election budget prioritises five key areas: (1) cost-of-living support, (2) strengthening Medicare, (3) building more homes, (4) investing in education, and (5) making the economy more productive and resilient​  In practical terms, that translates into income tax relief for workers, energy bill rebates, expanded healthcare subsidies, and initiatives to improve housing access. Importantly for investors, the budget avoids any radical shifts in tax policy for investments, instead focusing on targeted stimulus and stability. Overall, it sets a backdrop of modest fiscal support intended to underpin economic growth without significantly stoking inflation.