American Stocks Record Worst Quarter, European Markets Soar

While the American stock market is currently experiencing its toughest moments in the last three years, the European, and thus Croatian, market is proving to be a much better choice. American stocks recorded the worst quarterly result in nearly three years due to investors’ fears that Trump’s tariffs will bring stagflation to the world’s largest economy. The S&P 500 index fell 4.6 percent in the first three months of this year, marking the worst performance of this stock benchmark since the third quarter of 2022, according to FactSet data.

The sharp decline at the beginning of this year was driven by concerns that American tariffs on trading partners will slow economic growth in the U.S. while simultaneously increasing prices. Consumer and business sentiment has also significantly cooled, as shown by several recent surveys. Investors are preparing for Trump’s ‘Liberation Day’ event on Wednesday, when a 25 percent tariff on imported cars is expected to take effect, in addition to existing tariffs on imports of goods such as steel and aluminum.

What will happen, no one knows

‘I don’t think any of us expected such continuous noise in the headlines, a lack of clarity on how the administration will achieve its goals,’ said Jesse Mark, global head of equity capital markets at American bank Jefferies, to the Financial Times. Sharon Bell, a senior equity analyst at Goldman Sachs, stated that she does not necessarily see a bottom yet (in stock prices). Goldman raised its inflation rate forecast for the end of the year over the weekend and warned that it now sees a 35 percent chance of a U.S. recession next year, compared to the previous 20 percent.

The threat of tariffs increases the risk premium that investors factor in when investing in stocks. However, Wall Street analysts also warn that the American stock market has other issues, including a slowing growth rate and cuts in the public sector. Shares of large technology companies, which have dominated the stock markets in recent years, sharply fell in the first quarter, with the Nasdaq index dropping 10.4 percent. Technology sector stocks are under pressure from rising concerns about the economy and estimates that massive investments in artificial intelligence infrastructure may have been excessive.

Shares of Nvidia, whose chips are fundamental to artificial intelligence technology, fell nearly a fifth in the first quarter. Electric vehicle manufacturer Tesla plummeted 36 percent on the stock market. Industrial giants Apple and Microsoft lost about 10 percent. Shares of consumer goods companies and other economically sensitive stocks also sharply lost value. Nike fell 16 percent after the company stated that the trade war and consumer caution complicate its efforts to increase sales.

German Surge

On the other hand, European stocks have outperformed American ones, which is quite a turnaround compared to 2023 and 2024 when Wall Street left European exchanges far behind. The British FTSE 100 and the European STOXX 600 index rose about five percent. The German DAX, boosted by the abolition of the constitutional provision limiting borrowing, surged more than 12 percent in the first quarter, while the French CAC strengthened six percent. The Zagreb Stock Exchange index CROBEX also recorded a rise, albeit significantly lower, with a growth of 3.4 percent in the first three months.

The aforementioned uncertainty regarding American economic growth, and thus a good part of the world, has spilled over into the ‘safe haven’ market. Thus, the price of gold has climbed to a record $3,128 per ounce. The yield on 10-year U.S. Treasury notes, which moves inversely to prices, fell to 4.21 percent, down from 4.57 percent at the end of 2024.

In any case, the stock market in 2025 will certainly not be boring.