European markets and US stock futures are trading lower. This anticipated decline is largely attributed to President Donald Trump's recent announcement of a 25% tariff on imported cars and light trucks, set to take effect on April 3. 

 

The automotive sector, a significant component of both economies, is at the forefront of investor concerns.

 

In the US, futures for major indices such as the Dow Jones Industrial Average and the S&P 500 indicate a downward opening. Automotive giants like General Motors and Ford have already experienced notable share price declines, reflecting apprehensions about increased production costs and potential decreases in sales volumes. 

 

Analysts warn that these tariffs could lead to higher vehicle prices for consumers, potentially adding between $5,000 to $15,000 to the cost of imported cars and $3,000 to $8,000 for domestically produced vehicles that rely on foreign parts. 

 

This surge in prices is expected to contribute to elevated inflationary pressures throughout the year.

 

European markets are similarly impacted, with futures pointing to a lower open. The pan-European STOXX 600 index has seen declines, particularly within the automotive sector. 

 

Companies such as BMW and Volkswagen have reported share price drops, as investors react to the potential challenges posed by US tariffs on European car exports. 

 

The European Union has expressed strong opposition to the tariffs, with officials indicating readiness to implement retaliatory measures, thereby escalating trade tensions further.

 

The implementation of these tariffs has intensified fears of a global trade war. The automotive industry, deeply integrated into international supply chains, faces significant disruptions. 

 

The prospect of retaliatory tariffs from affected countries adds to the uncertainty, prompting investors to reassess risk exposures and leading to a sell-off in equities, especially within the automotive sector.

 

The anticipated increase in vehicle prices due to tariffs is expected to contribute to higher overall inflation rates. We project that the tariffs could push the overall inflation rate higher by 0.4 percentage points, impacting personal consumption expenditures and potentially leading to an annual core PCE increase of 2.8%. 

 

This scenario complicates monetary policy decisions, as central banks may face challenges in balancing inflation control with supporting economic growth.

 

These developments underscore the fragility of global markets in the face of geopolitical tensions and highlight the need for investors to remain vigilant amid rapidly evolving trade policies.

 

The situation remains fluid, and market participants are advised to monitor ongoing negotiations and policy announcements closely.-TradeArabia News Service

Kuwait equity market has been the top performer among GCC markets in the first quarter, gaining 9.7% for the quarter, according to Kuwait Financial Centre (Markaz). 

 

However, Kuwait markets were slightly negative in March 2025 following five consecutive months of positive performance, stated Markaz in its Monthly Market Review report.

 

Kuwait’s All Share Index declined by 0.3%, with mixed performance across sectors. Healthcare and insurance were the top gainers, rising by 9.9% and 3.3% respectively. The banking sector index gained 0.7% for the month. 

 

Among banking stocks, Burgan Bank and Commercial Bank of Kuwait were the top gainers, with a monthly return of 6.2% and 5.3% respectively. Commercial Bank of Kuwait’s net profit for FY 2024 increased by 41.4% y/y due to higher loan loss recoveries, increase in net interest income and fee income. 

 

Among Premier market stocks, Integrated Holding Company and Jazeera Airways were the top gainers, rising by 8.6% and 6.9% respectively for the month. 

 

Integrated Holding recorded a net profit of KD6.88 million for FY 2024, an increase of 67.7% y/y. Steady increase in demand for equipment services and reversal of provision for doubtful debt due to realization had contributed to the rise in profit.

 

Kuwait has passed the long-awaited public debt law, which would enable the country to raise debt in the international markets. 

 

The new law sets the ceiling for public debt at KD30 billion ($97.4 billion) and the ceiling for maturities of issued financial instruments at 50 years. 

 

In its budget for FY 2025/26, in the light of lower oil prices (estimated at $68/barrel) and Opec+ production cuts, the country has estimated a budget deficit of KD6.3 billion. 

 

With the earlier debt law expiring in 2017, the country has been drawing from its General Reserve Fund to fund its deficit. The new law would enable it to finance the deficit by raising debt from international markets. 

 

Kuwait’s CPI rose by 2.49% y/y in February 2025, remaining steady compared to 2.5% y/y increase in January 2025. The food and beverages segment continued to be the major driver, rising by 5.23% y/y.

 

The S&P GCC Composite index declined by 1.1% in March 2025 with all GCC markets in red weighed by trade war concerns and geopolitical tensions. Saudi equity index declined by 0.7% during the month. 

 

Acwa Power and Saudi Aramco had declined by 7.6% and 1.3% respectively for the month. Saudi Aramco’s net profit for FY 2024 declined by 12.4% y/y to $106.2 billion on the back of lower oil prices. 

 

As uncertainty lingers over the transition from trade wars to trade deals with the US, global economic confidence remains shaken. Gold prices have surged past $3,050 an ounce, reflecting heightened risk aversion among central banks. 

 

In response, monetary policies for 2025 are being recalibrated as central banks continue to closely monitor the prolonged trade tensions and their economic impact, according to a report by Forex.com, a global market leader in leveraged trading.

 

Major central banks have reacted cautiously, adjusting economic projections and policy stances to mitigate potential shocks. Federal Reserve Chair Jerome Powell has lowered the US GDP growth forecasts from 2.1% to 1.7%, with unemployment expected to rise to 4.4% and core inflation increasing to 2.8% by year-end. 

 

This signals mounting economic strain and reluctance to adjust rates prematurely, influencing the Central Bank of the UAE’s decision to hold rates, stated the report.

 

To shield their economies from the impact of tariffs, the Bank of Canada cut rates to 2.75% and the Swiss National Bank cut rates to 0.25%. On the other hand, the Bank of Japan held steady at 0.5%, while the Federal Reserve maintained rates at 4.5%.

 

Commenting on the UAE’s status in light of these global financial measures, Razan Hilal, Market Analyst, CMT at Forex.com confirmed that despite global market uncertainty, the UAE’s economy remains resilient.

 

"The residential real estate sector continues to attract demand, with capital values rising by 2% in February 2025. The UAE MSCI index, after a nearly 6.7% decline, rebounded over 3% as investors seized buying opportunities," explained Hilal.

 

"The index is now moving toward 2025 highs, in line with its 2022 highs above the 17-mark. Business activity remains strong, with MENA PMIs well above 50, signaling continued expansion," she stated.

 

Hilal pointed out that the path of the trade war between the US and major economic world players like China is still undefined, but the coming months are ought to shed light on the course of things, clarifying the extent of its potential effects on economies, including the UAE’s.

 

"If trade tensions ease and gold prices stabilize, the UAE’s non-oil sector is expected to grow further," she stated. 

 

"Even with oil prices at three-year lows, the UAE stock market remains near three-year highs, highlighting successful economic diversification," notyed Hilal.

 

"If trade conflicts escalate, broader economic effects may emerge, but the UAE’s stable investment climate and strong global ties should support continued resilience," she added.-TradeArabia News Service