Market snapshot: stocks make miserable start to the week

US markets stumbled again in the absence of any positive news, limping towards the end of what has been a particularly queasy quarter.

Investors had hoped that there would be some relief from the current pressure with the release of inflation and consumer sentiment readings, but were sorely disappointed on both fronts.

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The core Personal Consumption Expenditures index revealed a rise of 2.8% in February year on year and 0.4% for the month, higher than the 2.7% and 0.3% respectively which had been forecast. The apparent permanence of an economy which refuses to fall to the Federal Reserve’s target of 2% not only keeps pressure on households, but also lessens the likelihood of more immediate rate cuts.

In addition, consumer sentiment took another leg down against these elevated inflation expectations, while spending came in below estimates. If the consumer is retrenching, this puts additional strain on what is a central part of the US economic growth, let alone any inflationary impacts which the global tariffs could bring.

Comments over the weekend from an unrepentant President suggested that “Liberation Day” on Wednesday this week will continue as announced, in contrast to the fading hopes that the measures would simply turn out to be a negotiating tactic.

Non-farm payrolls figures on Friday will be followed by the beginning of the first-quarter reporting season next week, where expectations are already being dialled down as companies stall on investment and hiring decisions amid the confusion, and where inflation expectations have had an impact on the previously stellar growth stocks, such as the mega cap technology stocks. The volatility has driven a rotation into the perceived haven of gold, which continues to test record highs and has already added 19% in the year so far.

To some extent, this has been at the expense of the main indices, which are all in the red over the first three months of the year, with the Dow Jones down by 2.3%, the benchmark S&P500 by 5.1% and the tech heavy Nasdaq down by 10.3%, the latter being deep in correction territory and edging nearer to being in a bear market of its own.

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The carmaker tariffs continued to reverberate in Asia, especially in Japan which is home to some major global manufacturers. The Nikkei index fell by as much as 4%, with losses of around 3% for the likes of Toyota, Mazda and Nissan.

There was some brief respite to be found in China, where manufacturing data came in ahead of expectations. This gave rise to hopes that the stimulus measures announced thus far by the authorities are beginning to have an effect, notwithstanding the impending pressure which the global trade war will likely bring.

Despite its performance amid the turmoil as something of a defensive play, the FTSE100 was unable to dodge the latest volley of news and sunk at the open. There was some largely unconvincing buying in the more traditionally defensive sectors of the utilities and tobaccos, but the markdown was broadly based.

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The declines were typified with stocks having exposure to US tech such as Scottish Mortgage Ord (LSE:SMT) and Polar Capital Holdings (LSE:POLR) among the worst performers, while the resignation of the CEO at Primark, the primary driver of the Associated British Foods (LSE:ABF) conglomerate came at a bad time and led to a drop of more than 3% for the share price. Mining stocks were also out of favour despite the news from China, indicating a generally risk-off approach, with the weakness of the FTSE100 reducing its gain to 4.8% in the year to date.

Meanwhile, the FTSE250 echoed the dour sentiment, ahead of a week which domestically sees any given number of additional pressures coming to bear on households ranging from utility bills to insurance and stamp duty hikes, all of which will offset some of the relief that higher wage inflation has brought over the last few months. As something of a barometer for the UK economy, the decline of 4.7% this year for the index corresponds with the clouds which overhang the country at present.