Equity markets are firmly in the eye of the storm after US president Donald Trump’s unveiling of sweeping global tariffs sent global stocks into freefall.

IPOs on both sides of the Atlantic appear to be the first capital markets casualty of a collapse in market sentiment.

The market on both sides of the Atlantic has been weak since the start of March, due to increasing fears over tariffs, which were sent into overdrive last week.

As of market close on Friday, the three main US benchmarks, the Dow Jones Index, S&P 500, and Nasdaq composite had fallen 9.3%, 10.5%, and 11.3% in the two days of trading after Trump introduced his tariffs, on what he called ‘Liberation Day’.

Losses on 4 April were accentuated by retaliation from China on US goods, and the US futures markets pointed to even more punishing losses on Monday 7 April. Europe’s Stoxx 600 was down 7.56% over the same period and was down over 6% on Monday morning.

Equity capital markets issuers, and their advisors, certainly don’t feel very liberated by Trump’s dramatic move, and many are now predicting a period of stasis for capital markets. The immediate impact of tariffs has been felt in the IPO market in Europe and the US.

Volatility is poison for IPOs, and as of Monday, the CBOE Vix index, the most watched marker of global equity market volatility, was trading at around 50, up over 100% in the past 5 days and trading at its highest level since the worst days of the COVID-19 pandemic.

In reaction to the increased market volatility, both buy-now-later provider Klarna and ticketing company StubHub reportedly paused US IPO plans.

Even before the market volatility increased, ECM Pulse noted that global IPO issuers might seek to delay listings in reaction to a tepid market, as evidenced by demand for the listing of AI hyperscale CoreWeave, priced on 27 March.

To get the deal across the line, the company had to reduce both size and valuation and bring in Nvidia as an anchor investor to support the listing.

With Trump’s newest tariffs, the environment is now markedly worse.

Source: Dealogic

“We think all IPO timings are now firmly TBC until we get some sense of market stability,” said one ECM banker ruefully while reflecting on the worsening equity markets.

The extremity of the tariffs, and the market’s reaction to them, finalises for many in the equity capital markets the reality that 2025 is going to be a very different year than many had hoped for in January, when animal spirits, emboldened by the prospects of tax cuts and deregulation, seemed to herald a likely vintage year for dealmaking.

But huge losses taken by the buyside in the last few days have recalibrated risk tolerance, and even when the market reopens, there will likely be increased caution.

“Even when the IPO market does reopen, and it is tough to pinpoint when that might be, we will all have to reset views on the valuation for these assets,” the first banker said. “We will all have to go back to the investors and funds and see how they have performed through this, as that is going to influence their risk appetite.”

“It’s interesting to think we were meant to have two IPOs pricing next week,” said the same banker. “I suppose we can think of those sorts of plans as belonging to the olden times.”

A second banker said the narrative around the US and global recession is now set to ramp up, and that is going to make it tougher to find windows to price an IPO.

“Every year we start 1Q with these full pipes, predicting a great IPO year, and then by 2Q we suddenly all start focusing on the following year. “There weren’t that many flagship listings in the calendar in Europe anyway, and the US IPO market has been underwhelming as well.”

Planning for brighter days

Europe’s 2025 IPO pipe still includes some big names, including Spanish gaming company Cirsa and Germany’s Autodoc, which were both possible spring deals before the tariffs, although the former was moved from its original pre-Easter schedule.

“But we all have to stay measured and see what comes our way towards the second half of the year,” a third banker said. “The sun will rise tomorrow, but we can’t deny that this is extremely destabilising.”

There are also some far larger names that have been eyed by investors for 2025, including German pharmaceutical company Stada, which had also been aiming for a pre-Easter IPO, Dutch telecommunications company Odido, and Swiss security systems firm Verisure.

All are still possible this year, and the subject of reverse interest from investors before Trump’s tariff announcement.

“Stada could have gone before Easter, it was possible, but even before this new tariff announcement, the market volatility at the time would have meant the valuation hit would have been too great,” the first banker said.

In the US, market participants are now waiting to assess whether new decisions can be taken in the coming weeks.

Alongside Klarna and StubHub, Q2 deals including eToro, Chime, Circle, and Medline are now effectively paused.

In this respect, Josh Weismer, head of equity Capital markets at Mizuho, described the market reaction as “somewhat worse than expected, but not surprising.”

The last time volatility spiked this high was early August last year, he said, and it came down quickly.

“We don’t know what’s going to happen this time, but the message we keep telling clients is that they need to be ready to go when the window opens.”

Several companies that launched in the two weeks before the announcement of the tariffs were able to raise significant amounts of capital despite heightened volatility, he added, showing that “even during periods of volatility, there are pockets of calm between the turbulence where you can get equity transactions done.”

The demand for block trades, particularly in Europe, has also been present throughout the year. While most sellers will need to wait for some market calm, and many are prevented from equity sales due to blackouts around results periods, many will be ready for a time when markets are less turbulent.

This is hard to predict, though, given the nature of the crisis affecting global stocks.

“We have been through crises before, the COVID-19 pandemic, the sovereign debt crisis, and Brexi,t and we will find a way through this one, and we have some great businesses that we could bring to market in the second half,” the first banker said. “However, this one is different, with all those other periods, there was a structural issue driving the selling, this is unique in that it is just one-man volatility.”