Tantrums and TIARAs

(Reuters) - The first three months of 2025 promised to be bumpy, but few expected the world to be on the verge of a full-on trade war and for investors to be fleeing Wall Street quite so fast after U.S. President Donald Trump's return to the White House.

Investors in emerging markets have been rattled by a spate of domestic crises and UK markets are facing a reckoning of their own as the impact of Trump's tariffs becomes apparent in global economic data.

Here's a look at what's coming for markets from Rae Wee in Singapore; Lewis Krauskopf in New York; Naomi Rovnick, Karin Strohecker and Amanda Cooper in London.

1/TIARA TIME?

U.S. equities are bleeding money at one of the fastest weekly rates on record, and the cash is finding a home in previously neglected markets. Europe's STOXX 600 is set for a gain of 9.3% in the first quarter, against the S&P's 4.5% loss, its strongest performance against the U.S. benchmark in the first 12 weeks of the year since 2015.

Defence stocks have led the charge higher as European leaders have sought ways to fund spending on security, with U.S. support no longer seeming to be a given. Chinese tech stocks have shot up, with a regional index over 30% higher, while a basket of Wall Street's Big Tech stocks is down 15%.

World stocks minus the United States are heading for their best first-quarter performance since 2019.

Move over, TINA - There Is No Alternative -. Investors are considering TIARA - There Is A Real Alternative - to U.S. stocks.

2/ROUGH RIDE

Selloffs in Turkey, Indonesia and Colombia in recent days have focused investors' minds on slow-burning issues plaguing some developing economies.

A return to orthodox monetary policy over the past two years had seen investors warm to Turkey again. But authorities detaining Istanbul Mayor Ekrem Imamoglu, President Tayyip Erdogan's main political rival, caused a lira rout and sent stocks and bonds sharply lower, prompting the central bank to raise overnight lending rates.

Worries over Indonesia's fiscal strategy and growth outlook roiled the rupiah and stocks, prompting central bank intervention. Also, Colombia's finance minister resigned amid clashes over budget cuts, hours after lawmakers rejected a labour reform by leftist President Gustavo Petro, who has already replaced 12 of his 19 ministers.

3/DATA DIVE

Investors wary of signs of slowing growth and tariff uncertainty get a raft of fresh U.S. data in the coming week, including a key inflation gauge.

February's personal consumption expenditures (PCE) price index, a closely watched measure of inflation, is due on March 28. The Federal Reserve on Wednesday lifted its expectation for PCE, projecting it would end the year at 2.7%, up from a previous forecast of 2.5% - above its 2% target for annual inflation.

Fed Chair Jerome Powell has signalled the U.S. central bank will wait for more clarity on Trump administration policies as it assesses when to resume rate cuts.

Measures of consumer confidence and consumer sentiment will also be in the spotlight after U.S. retail sales rebounded marginally in February.

4/BLEAK BRITAIN

UK investors are about to discover whether weak growth and unexpectedly high borrowing have blown the Labour government's budget goals far enough off course for markets to call for a return to austerity measures.

Alongside finance minister Rachel Reeves' March 26 Spring Statement, the Office for Budget Responsibility (OBR) is expected to reduce forecasts that, back in October, assumed the government would just meet its self-imposed spending rules.

The Institute for Fiscal Studies has warned that even a minor OBR downgrade would force Reeves to choose between tax increases, spending cuts or months of "damaging speculation" about what she will do in the Autumn budget.

Long-term UK debt costs set by the gilt markets are about 15 basis points (bps) below January's multi-decade highs after Labour's welfare cut pledges, but bond investors are on high alert for a rule breach the government cannot fix.

5/PULSE CHECK

Australia and Tokyo will get their inflation report cards in the week ahead, as central bankers around the world try to assess the impact of Trump's tariff policies on global price pressures.

Australian consumer prices on Wednesday are expected to have held steady in February. This could support the still-cautious Reserve Bank of Australia's patient approach to future rate cuts.

Tokyo inflation is due on Friday, as the Bank of Japan (BOJ) continues to monitor mounting domestic price pressures that could warrant further monetary tightening.

The BOJ kept rates unchanged at its March meeting and offered few hints on the timing of its next rate hike. But Governor Kazuo Ueda suggested the central bank could deliver one even before the dust settles on the impact of U.S. tariffs.

(Compiled by Amanda Cooper; Graphics by Sumanta Sen, Kripa Jayaram and Pasit Kongkunakornkul; Editing by Timothy Heritage)