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Market strategists see more pain ahead as a result of tariff-induced volatility. "We think it's too early to go bargain shopping," an investment chief wrote.

World financial markets kept on a radical readjustment course on Thursday after U.S. President Donald Trump's shakeup of the transatlantic relationship spurred a seismic, half-a-trillion-euro shift in German defence and infrastructure spending. The European Central Bank cut its interest rates again, as expected, and said monetary policy was becoming less restrictive, which traders took to mean another cut in April might not be a given - giving the euro another boost. "The reality is that I still don't think the enormity of the (German) news has got close to being fully comprehended and digested by global investors yet," said Deutsche Bank's Jim Reid, who estimated that Wednesday's Bund yield spike was the biggest move since German reunification in 1990.

Goldman Sachs raised its target price for emerging markets stocks on Thursday, projecting that the AI-powered rally in Chinese equities could boost other markets as well. The brokerage raised its 12-month target for MSCI Emerging Markets Index by 3%, reaching 1,220 from 1,190, indicating an 11% potential upside from current levels. The increase reflects Goldman Sachs' recent adjustment to its MSCI China target, driven by the impact of AI adoption on valuations through earnings, multiples and portfolio flows.

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Elevated mortgage rates and rising home prices are freezing out many would-be buyers, keeping the U.S. housing market in a sales slump dating back to 2022. While home sales are off to a soft start this year, it hasn’t been all bad news for home shoppers. Leo Pareja, CEO of real estate brokerage eXp Realty, recently spoke to The Associated Press about his expectations for the housing market, the trajectory of mortgage rates and how home shoppers in places like Florida, Texas and other states where home listings have risen sharply are likely to have more leverage when it comes time to negotiate with sellers.

Economic forecasts have been weakening. While some see slower growth, several commentators see the chance of an outright recession rising this year.

A Federal Reserve Bank of New York official who manages the implementation of monetary policy indicated Wednesday the central bank has room to further shrink its balance sheet, while noting government financial management issues will create challenges for the process over the short run. Market indicators “are telling us that reserve conditions are currently abundant, as they have been for quite some time,” said Roberto Perli, who manages the Fed’s System Open Market Account, its portfolio of bonds, cash and other assets, which currently stand at $6.8 trillion. Perli’s comments suggest that all else being equal, there’s no imminent need to end the contraction of Fed holdings known as quantitative tightening, or QT.