Week ahead: Global sentiment sours as Trump’s auto and reciprocal tariffs loom

Risk-off sentiment prevailed in the global markets last week after US President Donald Trump confirmed that he would proceed with auto and reciprocal tariffs on Wednesday this week. Adding to concerns, hotter-than-expected US Personal Consumption Expenditure (PCE) data fuelled worries that the US economy may be slipping into stagflation, with potential repercussions for global markets.

Against this backdrop, this week’s US employment data will be closely scrutinised, as any signs of a weakening labour market could accelerate the downturn in equities. Investors will also monitor the economic fallout from Trump’s tariffs and possible retaliatory measures from Canada, the European Union, and China. Other major economic data to be watched include the eurozone’s flash inflation data and the Reserve Bank of Australia’s (RBA) interest rate decision.

In mid-March, the European Commission announced plans to impose import duties on €26 billion worth of American goods in April. These measures include the reinstatement of countermeasures against €8 billion worth of US exports, set to take effect on Tuesday. Following Trump’s tariff announcement, European equity markets retreated sharply from near-record highs last week, with the automotive, healthcare, and industrial sectors bearing the brunt of the selloff. Further declines may follow if market sentiment continues to deteriorate.

On the economic front, Germany is scheduled to release its preliminary CPI for March on Monday. Annual inflation stood at 2.3% in February, unchanged from the previous month, while the monthly CPI is forecast to rise by 0.3% in March.

The eurozone’s flash inflation report, due on Wednesday, will be another key focus. Recent CPI data from France and Spain