A year ago, the question raised at this point was whether a war chest or a peace dividend was the more likely scenario, highlighting the risks of military, hybrid and trade conflicts. Since then, a number of developments have shaped the geopolitical and economic environment: the tariff announcement in the White House Rose Garden and the sharp increase in US tariffs, subsequent agreements on somewhat lower – though still historically high – tariff levels, negotiations around Russia’s ongoing war against Ukraine, tensions within NATO, the end of the war in Gaza, the US intervention in Venezuela, and the escalation of the US-Israel-Iran conflict that began in late February. At the same time, there were the US president’s (unfulfilled) calls for a more accommodative monetary policy, followed by the nomination of a designated successor to Jerome Powell who comes from within the monetary policy establishment. Meanwhile, the ECB has brought its rate-cutting cycle to an end at 2%. And last but not least, Austria’s longest – albeit not deepest – recession of the post-war era has finally come to an end.
The turbulence outlined above shook financial markets only briefly following the tariff announcement in the White House Rose Garden. Equity markets subsequently moved to new record highs. The ATX, which had already reached a record high in its total return version in 2024, also surpassed its previous peak in the regular price index and got off to a positive start to 2026.
Several factors contributed to the resilience of equity markets, in particular:
- The immediate impact of tariffs appears to have been overestimated.
- Investment in and expectations for artificial intelligence have been booming.
Both themes have seen new developments in recent weeks:
- The Supreme Court ruled that country-specific tariffs decreed by the US president are unlawful.
- While concerns about overinvestment and potential material shortages were the first concerns to dampen enthusiasm surrounding artificial intelligence, a bleak scenario regarding its macroeconomic consequences was published in the last week of February, attracting considerable attention in financial markets.
The tariff ruling could bring some relief, but it was immediately followed by the introduction of a general tariff rate of 10% for 150 days in order to gain time for alternative solutions. Product-specific tariffs or tariffs introduced in response to trade barriers remain in place in any case. At the same time, uncertainty has increased again and trade agreements that were painstakingly reached in 2025 could potentially be reopened. In the run-up to the US midterm elections, compromises may prove particularly difficult. Companies are now examining whether and how they can reclaim tariffs that were wrongly paid to the government. However, developments in 2025 have shown that companies have been coping relatively well with rising and fluctuating trade barriers. The IMF raised its expectations for global economic growth both in October 2025 and again in January 2026. The more dystopian scenarios surrounding artificial intelligence highlight the need for regulation – traditionally a European strength – and are once again bringing classic industrial and dividend stocks back into the spotlight in equity markets. The ATX can only benefit from this. The escalation in Iran has pushed oil prices higher. Over the year, however, they are likely to decline again, easing pressure on equity markets as well. Less relief is likely to come from the interest rate side. The segmentation of global trade and higher security spending – particularly by governments, but also by companies, for example to defend against cyberattacks – contribute to inflation likely being back to stay. As a result, there is likely to be almost no room for further rate cuts in the euro area and, even with a new Fed chair, only limited scope in the US, amounting to around 50 to 100 basis points.
Title quote: attributed to Karl Valentin (source and date unknown).
Author:
Uta Pock
Senior Research Analyst
VOLKSBANK WIEN AG
2 March 2026
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Note
Wiener Börse AG would explicitly like to point out that the data and calculations given in this report are historic values, which do not permit any conclusions as regards future developments or value stability. Price fluctuations and loss of capital are possible in securities trading. The contribution is the personal opinion of the analyst and does not constitute a financial analysis or a recommendation for investment by the exchange operating company, Wiener Börse AG.