All week Donald Trump has been trumping stocks with his tariff tinkering and tirades that have really unsettled markets. Of course, uncertainty always rattles share players and that’s what we’ve been served up out of the White House. Even this morning, the President suggested that reciprocal tariffs imposed on trading partners could, wait for it, start today!

Against these curve balls thrown by the President, boss of the Federal Reserve Jerome Powell testified before a Senate banking hearing with a soothing tone. The summary of his thoughts was that there’s a lot of noise and no one aspect of ‘Trumponomics’ (my word, not his) that includes tariffs, immigration, deregulation and fiscal policy, is distracting the Fed from its core job to contain inflation long term and ensure economic growth.

This was delivered as the latest jobs report showed 150,000 positions were created in February, which was a little less than what economists predicted but was neither worrying for growth nor inflation concerns. Meanwhile, unemployment increased from 4% to 4.1%, which was not a worrying development.

Interestingly, money markets have reacted to what Powell said and now expect rate cuts in June, September and December. These are important takeaway messages for investors who are rattled by the tariff terrors that are unsettling stock markets.

And they have been really hitting and hurting stock markets. Weeks ago, I warned that a sell-off was on the cards, with AMP’s Shane Oliver then tipping a possible 15% correction. Despite this, he tipped stocks would bounce back and end in positive territory for the year.

I’d argue 15% might be on the high side but Trump’s capacity to turn on a dime with what he plans to do with tariffs is surprising and shocking Wall Street. So, the fear and anxiety has spread globally to other stock markets, including ours.

The S&P/ASX 200 is down 6.3% in a month, while the S&P 500 is off 4.81% and the Nasdaq has slumped 7.51% before the close on Friday. From their recent highs, the falls have been bigger for the two US market indexes.

Our reaction looks excessive because there is a rotation going on out of the big cap stocks that have driven our market higher in recent years.

If you need proof, look at the CBA’s share price that’s down 8.8% over the month and is now at $148.50 after topping out at $166.72! The problem for our index is that the likes of BHP and Rio Tinto haven’t had sufficient encouragement from China’s growth prospects to push iron ore prices higher.

However, that growth will eventually kick in and money will end up in many of the smaller and mid-cap stocks that have been sold off this week, as the market panicked about what Donald Trump might announce next.

Not helping at the moment is that many stocks have high

price earnings multiples, so bonds are attracting investors more than they did months ago.

In the face of ongoing Trump driven policy uncertainty, with a flow on to economic conditions, it means there’s a high risk of more sell-offs for shares. This will create a buying opportunity that will be helped by a possible Trump adjustment of his tariff play, rate cuts from the Fed, tax cuts and deregulation moves.

Eventually, the administration knows a big stock sell-off won’t be good for the mid-term election in November 2026, so Trump’s policies will need to look like they’re making America great again!

To the local story and our market copped it, with the S&P/ASX 200 slumping 2.74% (or 224.20 points) this week to finish at 7948.20, so we’ve given up 7.1% since our all-time high!

This confidence killer won’t be ignored by the RBA. Provided inflation keeps heading down, a May rate cut will be on the cards. The best hope for our market’s rebound will be good inflation readings leading to rate cuts in concert with a stronger Chinese economy.

Both economic data out of China and inflation numbers from the Melbourne Institute were promising this week.

Let’s now look at the star and struggler companies that gained or lost 5% this week. Given what happened because of tariff fears, there are more strugglers. Here goes:

Reach for the stars…

1. West African Resources surged 27.01% to $2.21.
2. Johns Lyng Group u-turned to rise 7.69% to $2.80.
3. Bellevue Gold glittered up 7.11% to $1.28.

And the strugglers…

1. Woodside drilled down 9.35% to $22.49.
2. Smartgroup was off 5.58% to $7.80.
3. Tabcorp lost 8.45% to $0.65.
4. CBA is on the slide, down 6.25% to $148.50.
5. Treasury Wines weren’t in a ‘cheers’ mood, sliding 7.73% to $10.15.
6. Block was blocked down 11.96% to $94.20.
7. Ampol was out of fuel losing 7.53% to $24.43.
8. Boss Energy has no nuclear support, off 9.09% to $2.30.
9. NRW fell 6.95% to $2.81.
10. Harvey Norman was discounted by 6.08% to $5.10.

What I liked

1. Real GDP rose by 0.6% in the fourth quarter of 2024 and annual growth stepped up to 1.3%.
2. In terms of the “cost-of-living” crisis in Australia, the good news is that real household disposable income per person is rising again, helped by tax cuts, wages growth running above inflation.
3. The Melbourne Institute’s Inflation Gauge for February fell to 2.2% year-on-year, with trimmed mean inflation falling to just 1.8% year-on-year,pointing to a further fall in the ABS’ measures of inflation.
4. Building approvals surged 6.3% in February driven mainly by a 12.8% rise in unit approvals.
5. The European Central Bank cut interest rates again for the Eurozone.
6. Talk of more fiscal stimulus for the Eurozone is a plus for global growth in 2025-26.
7. Eurozone inflation fell to 2.4% year-on-year in February, with core inflation falling to 2.6% year-on-year.
8. China’s National Peoples’ Congress has set a growth target of “around 5%” again for this year, with a budget deficit target of 4% of GDP, up from 3% in 2024.

What I didn’t like

1. Trump’s tariff trauma for world stock markets.
2. Lower iron ore prices on global growth concerns.
3. Trump’s crypto support.
4. Locally, home prices rose in February, helped by all the talk about rate cuts.
5. In the US, the ISM business conditions indexes were down for manufacturing but up for services – with both showing higher prices and respondents comments referring to the impact of tariffs. (The rise in services is good but I don’t like the price rises.)

The big watch for this week

Apart from Donald Trump’s tariffs, the next big issue will be the data drops on US inflation. The market needs not to be worrying about ‘sticky’ inflation, so if the CPI on Wednesday and the Producer Price Index on Thursday come in OK, then there could be supportive expectations that the Fed will be able to cut rates two or three times this year, and the market will like those kinds of thoughts.

P.S. This won’t surprise you, but Wall Street ended up in positive territory after some Trump comments and after Treasury Secretary, Scott Bessent, told CNBC that any tariffs implemented would be a “one-time price adjustment” and not spark lasting inflation.