Markets remain on edge as U.S. equities struggle to stabilize after last week’s selloff. From Wall Street to Main Street, inflation fears, tariffs, and policy uncertainty are rattling sentiment. Yet, on this side of the Atlantic, European fund managers and investors are keeping their cool—even as their U.S. exposure keeps them tethered to the same risks.
For investors in U.S. equities, last week’s market turmoil was a stark reminder of how quickly confidence can erode. Worries over President Donald Trump’s tariff policies and their impact on trade, economic growth, and jobs weighed heavily on sentiment.
Inflation, still squeezing household budgets, added to the uncertainty. With almost three out of four Americans concerned about tariffs, investors followed suit, pushing the S&P500 into correction territory.
Survival
The president’s online barrage—some days more than 100 posts in less than 24 hours—has only added to the turbulence. One second-year associate at a New York-based hedge fund, managing leveraged positions in U.S. blue-chip stocks, admitted he was simply “trying to survive the flood of Trump-tweets.”
For his firm, the new rhythm of White House communication leaves little choice but to adjust risk allocations multiple times a day, as markets struggle to distinguish policy signals from political noise.
Who says what?
When speaking to Investment Officer on this side of the Atlantic, portfolio managers appear more composed, even though they face the same challenges and hold significant exposure to U.S. markets.
Jordy Hermanns, portfolio manager at Aegon AM, stressed that sentiment can often overshadow fundamentals. The prolonged bullish run in markets had stretched valuations, making a correction all but inevitable.
“You would expect actual economic impact to be the decisive factor, but in the short term, psychology is what matters most,” he said.
His colleague Jakob Vijverberg, head of asset allocation, acknowledged that while markets are unpredictable, seasoned investors are accustomed to volatility.
“We try to look through the noise, but it’s likely never fully possible,” he said, noting that while the initial fear over tariffs had been significant, their longer-term effects may not be as detrimental as some of the price action might imply.
‘Stick to the process’
Raymond Verstraelen, head of rates at Achmea IM, emphasized the importance of staying disciplined amid the volatility.
“You can’t let yourself get rattled. Stick to the process. This is not the time to play the hero,” he said, adding that “volatility also creates opportunity.”
“With Trump and tariffs, it’s a flood of headlines, many of them ambiguous,” he said. “There was a time when investors could wait for a single data release, digest the information, and move on. Now, every day is about staying alert: What was said? Who said it? How much weight should we give it?”
Erratic market behaviour
For some, staying calm is proving difficult. On Wall Street Oasis, an online forum for finance professionals, a hedge fund analyst admitted to suffering “panic attacks” and sleep deprivation amid the latest market swings. While some forum members tried to dismiss the turmoil as part of the job, others noted that the erratic market behavior was making it harder to stay rational, even for seasoned investors.
Treasury secretary Scott Bessent is also playing down the market turmoil. Speaking on NBC’s “Meet the Press” on Sunday, he argued that “markets that go straight up are more concerning”, describing the selloff as a normal and healthy part of investing.
Kevin Hassett, director of the National Economic Council and a close Trump adviser, acknowledged that volatility might persist but insisted clarity would come once the administration moves forward with its reciprocal tariff framework next month. Meanwhile, in a recent Truth Social post, Trump himself urged his followers to “let Trump be Trump on the economy.”
But market sentiment tells a different story. CNN’s Greed & Fear Index has plunged into “extreme fear” territory, while U.S. corporate bond spreads are widening—both signs of mounting stress in financial markets. At the same time, Google searches for “recession” have surged since early March, underscoring growing unease among American households. The S&P500 is down 3.3 percent this year.
More room for corrections
Even so, Vijverberg doesn’t see equities as attractively discounted just yet. “The discount isn’t yet large enough to be truly attractive. Global equities haven’t fallen far enough,” he said. The broader concern remains the unpredictability of political developments. “The logic behind some policy changes has become increasingly hard to grasp.”
“We’ve been through so many crises—Covid, the global financial crisis, the euro crisis. Compared to those, what we’re experiencing now is relatively mild,” Vijverberg said. That said, he remains cautious, warning that if uncertainty persists, it could start to weigh on business confidence and capital costs. A recession in the US is not yet our basecase, he said.