WeekWatch

17th March

Stock Take

US equities continued to fall last week, as ongoing policy uncertainty and tariff threats hampered market confidence.

US equities had initially surged following Trump’s election in late 2024, as investors hoped the returning President would reduce regulation and taxes, boosting growth.

However, since mid-February, these gains have been more than reversed. A fear of tariffs and potential trade wars has dampened hopes of a kicker for economic growth. In general, markets have found themselves wrongfooted by the President’s unpredictable style, unable to anticipate his actions. This has led to increased uncertainty, which markets typically react poorly to.

According to Hetal Mehta, Head of Economic Research at SJP: “The data flow we’ve had out of the US in the last couple of weeks has broadly turned south, from consumer confidence surveys to Purchase Manager Indices (PMIs). So far, this is mainly concentrated in what we call soft data, such as surveys. We still need to see if this sentiment lasts long enough to feed into ‘harder’ economic data though.”

This has fed through to poor performance from US stocks since mid-February. Hetal notes: “Uncertainty tends to feed into investment decisions. It’s clear the indirect effect of this uncertainty has been quite material."

This was especially evident at the start of last week, as a number of large companies were hit hard. By Thursday, the S&P 500 had fallen over 4%, before something of a recovery helped reverse some of the loss. The Index finished more than 2% down over the week. There was a similar story for the Dow Jones and NASDAQ, the latter now down over 10% since the start of the year.

Turning to the UK, the Office for National Statistics revealed that the UK economy shrank 0.1% in January. Expectations had been for a small positive over the month.

With the Spring Statement due next week, this highlights the challenge the Chancellor is likely to face in 2025, as growth undershoots the economic forecasts she had based her calculations on.

There are low expectations of positive messages from the statement, however Felipe Villarroel, Partner at TwentyFour Asset Management, suggests looking out for potential reforms targeting the welfare system. “The positive spin on this situation would be that if the government’s welfare reforms were to result in more people entering the workforce, this could have a positive impact on productivity and wage inflation.” Despite the wider economic malaise in the UK, the FTSE 100 has been one of the better performing markets in recent months. A 0.6% fall over the week compares well to other Western markets and leaves the UK’s main index up 5.6% for the year to date. This is a reminder that markets don’t always perform in line with the wider economy. Although Continental European markets were down for the week overall, partly thanks to wider geopolitical uncertainty, they finished the week strongly. On Friday, German chancellor-in-waiting Friedrich Merz said he’s secured the crucial backing of the Greens for his borrowing plan. This potentially enables its imminent passage through parliament, which lifted confidence in the market.

Wealth Check

According to the Office for National Statistics, based on an analysis of the data gathered during the 2021 census, an estimated 13.6% of boys and 19% of girls born in the UK in 2020 are expected to live to at least age 100.1 Longer lifespans mean people are inheriting later, and, crucially, that many inheritances are shrinking, as retirement income needs to stretch for longer.

Lump sum inheritances can change a family’s fortunes. They are often used to pay off mortgages early, cover independent school fees or even launch a new business venture.

So, when it comes to passing your own money on to your children and grandchildren, it can be hard to accept that some of your money may not reach those you love due to inheritance tax (IHT) payable on your assets.

You may be able to mitigate some of what could be payable by making full use of exemptions, gifting, trusts and other tax-efficient strategies during your lifetime.

The best time to start IHT planning is when your savings and assets begin to accumulate. This is often when your day-to-day expenses go down, such as when children leave home, or your mortgage repayments are almost finished. That way, you give yourself plenty of time to plan properly, make sure you don’t compromise your own standard of living or later life care.

It's also important for your inheritance planning to keep pace with your family. Whenever there’s a significant life event such as a new grandchild, or a new marriage, you may want to consider whether to update your Will.

Conversations around inheritances can be some of the most difficult to have with your family.

Any conversation about money and inheritances can become heated, or lead to argument or accusations. But much better to start talking now, while you’re still here to explain what you want to do. That way, there are no surprises in your Will.

As financial advisers, we’re as experienced in helping you start these conversations as we are at explaining your financial options and choices. By involving a third party such as a financial adviser, you can often reach common ground more quickly, without coming to blows.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

Will writing involves the referral to a service that is separate and distinct to those offered by St. James's Place. Wills are not regulated by the Financial Conduct Authority. Wills and Trusts are not regulated by the Financial Conduct Authority. Source

1. Office for National Statistics website, past and projected period and cohort life tables: 2020-based, UK, 1981 to 2070.

In The Picture

US markets have hogged the headlines due to their strong performance in recent years. But when you look more closely, the numbers tell a different story.

Falling values since the start of 2025 have erased much of their gains , leaving them fairly level with the rest of the world over the past 12 months.?It’s a reminder that market leadership shifts – and that chasing past winners isn’t always a winning strategy.

As Joe Wiggins, our Investment Research Director, explains:

"Although blocking out short-term noise is an essential skill for any long-term investor, the recent shift in market performance patterns is a useful reminder of how unpredictable financial markets are, and how quickly prevailing trends and narratives can change.

The truth is that the future is inherently uncertain and ensuring we have a well-diversified portfolio that aligns with our long-run goals is the best protection against this."

Past performance is not indicative of future performance. Please note it is not possible to invest directly into an index and the figures shown do not take into account any charges applicable to the appropriate investment wrapper or any relevant tax charges.

The value of a St. James's Place investment will be directly linked to the performance of the funds you select and the value can, therefore, go down as well as up. You may get back less than you invested.

Source: FE Analytics and MSCI, 2025.

The information contained is correct as at the date of the article. The information contained does not constitute investment advice and is not intended to state, indicate or imply that current or past results are indicative of future results or expectations. Where the opinions of third parties are offered, these may not necessarily reflect those of St. James's Place.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ?LSE Group 2025. FTSE Russell is a trading name of certain of the LSE Group companies.

“FTSE Russell?” is a trade mark of the relevant LSE Group companies and is used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company’s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.

? S&P Dow Jones LLC 2025; all rights reserved

Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.

SJP Approved 17/03/2025