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.

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.

Wills and Trusts are not regulated by the Financial Conduct Authority.

Source1. Office for National Statistics website, past and projected period and cohort life tables: 2020-based, UK, 1981 to 2070.

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.