The Monday blues wrought havoc.

The S&P 500 suffered its biggest decline since September in an all-too familiar pattern. Since President Donald Trump’s inauguration on January 20th, we have seen three Mondays when the S&P 500 opened with over 1% in losses and finished lower for the day.

Monday’s session for the index ended 2.7% lower as investors fled riskier assets. Tech shares were particularly hard-hit, with the Nasdaq sinking 4% and the Magnificent Seven stocks shedding $760 billion in market value. Fears about Trump’s trade policies and their inflationary effects rippled through markets.

Tesla suffered some of the worst losses, dropping 15% on Monday, taking the company to a loss of over 40% since the start of the year. Nvidia, the company that could do no wrong in 2024 is now down just over 20% this year.

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European stocks advanced a touch today after having lost around 2.5% over the last 5 days. President Donald Trump sought to reassure about the outlook for the US economy and Ukraine accepted a proposal for a 30-day truce with Russia, so things look slightly less bleak Wednesday morning.

The Stoxx 600 index rose 0.7%, set to end four days of declines, while contracts for US stocks edged higher after Trump said he doesn’t see a US recession, downplaying Wall Street’s jitters. Zealand Pharma A/S soared 40% after Roche Holding AG licensed its new weight-loss drug. Shares in Inditex SA fell after the Zara owner’s sales made a slow start to the year.

The dollar strengthened against all of its Group-of-10 peers and Treasuries ticked higher.

The latest international trade salvos were also in focus as the European Union retaliated with levies of its own after US import duties on steel and aluminium took effect.

Trump’s tariff policies, geopolitical realignments over Ukraine, sticky inflation and the unknown pace of Federal Reserve interest-rate cuts have battered markets this year, leaving US stocks on the verge of a correction.

“Any relief from all that geopolitical noise is a good thing for markets right now,” said Ken Wong, an Asian equity portfolio specialist at Eastspring Investments. News regarding a ceasefire in Ukraine and relief in the tariff tensions between the US and Canada are helping, he said.

Trump told top executives gathered at a meeting of the Business Roundtable that he’s putting a priority on speedy approvals, particularly regarding environmental regulations, and planned to soon announce a major electricity project, according to a person familiar with the session. He also reiterated a suggestion that a company’s business taxes could be reduced if it manufactured its products in the US.

Growing scepticism over the US economic outlook prompted Goldman Sachs strategists to slash their target for the S&P 500, joining a growing chorus of banks that have expressed concerns over economic growth amid heightening geopolitical uncertainties.

For his part, Trump tried to damp concerns of a recession in the US economy.

Investors will now be looking to the US consumer inflation reading later Wednesday. The consumer price index is seen advancing 0.3% in February after a 0.5% gain at the start of the year.

Markets “will be wary of further signs of sticky prices,” said Kyle Rodda, a senior analyst at Capital.com in Melbourne. “Further evidence of inflation stuck at current levels will raise concerns that the Fed will lack the wiggle room to cut rates if Trump’s economic policies cause a precipitous slowdown in economic growth.”

It’s 25 years on from the peak of the dot-com bubble, and tech stocks are plunging. That’s a worrying coincidence, but this selloff doesn’t have to go the same way as its historical predecessor.

The Nasdaq Composite is down 13% since its record high on 16^th December. The index had its worst day on Monday since 2022 as investors fled the so-called Magnificent Seven group of megacap stocks and those tied to the wider artificial-intelligence trade.

However, the signs point to a dampening of the market euphoria around President Donald Trump’s re-election and AI hype rather than a broader crisis. The S&P 500 was recently trading at 21 times its expected earnings over the next 12 months, above its 10-year average of 18 times. Consecutive gains of more than 20% over the past two years led by a small group of stocks have left the market vulnerable to a sudden pullback, more indicative of a correction than the prolonged decline of a bear market.

There is still time for interest-rate cuts, planned tax reductions, and a potential softening of the trade-war rhetoric to bring calm to the markets. History since the dot-com bust is on the side of a brief dip, of the 18 times since 2000 that the S&P 500 has breached its 200-day moving average during a selloff it has bounced back quickly 11 times, according to Ritholtz Wealth Management.

That doesn’t mean policymakers and investors should be complacent. Delta Air Lines’ caution that consumer and corporate confidence is being shaken is a warning that a brief scare has the potential to turn into something bigger. But for now, it’s probably still better to be greedy than fearful.

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Like any investment house, this week has been a tough one for any of our strategies on the BUY side. However, I believe when the dust settles and markets return to some form of normality, that we will do well from this latest bout of volatility.

The reason for this is because of how we approach the markets.

Yes, just like other wealth managers our trackers are tracking (and hurting), but our 'long or flats' were flat as the markets started to retrace and bought into the dip, and our active strategies have built a fair sized BUY position as markets have retraced.

Volatile moments like right now create nervousness. For cool heads, they also create opportunities.

As markets start to bounce back (they will do at some stage) we'll be well placed.

Enjoy the rest of the week in the markets.

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