Market Turmoil: Trump’s Return Sparks Volatility
As Donald Trump returned to the White House, global markets experienced a rollercoaster ride, with the dollar rebounding in choppy trading. Despite not imposing tariffs on Monday as promised, Trump hinted at introducing 25% duties on imports from Canada and Mexico on February 1, citing concerns over illegal immigrants and fentanyl crossing into the U.S.
Currency Chaos
The Mexican peso and Canadian dollar plummeted against the greenback, while European shares dipped in early trade. U.S. stock futures, however, remained firm. Investors and analysts weighed in on the market mayhem.
Tariff Uncertainty
“Markets will try to anticipate and dissect which sectors and areas will be targeted by tariffs, leading to volatility,” said Amelie Derambure, Senior Multi-Asset Manager at Amundi. Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, added, “Our base case for the U.S. economy is for ‘growth despite tariffs.’ We do not believe that the tariff measures outlined in our base case would be sufficient to derail U.S. growth.”
Global Growth Concerns
Jim Reid, Global Head of Macro Strategy at Deutsche Bank, noted, “A lack of immediate moves on tariffs supported the market mood yesterday, but this has partially reversed overnight as Trump renewed an immediate threat of 25% tariffs on Canada and Mexico.” Kyle Rodda, Senior Markets Analyst at Capital.com, emphasized, “Tariffs mean a stronger U.S. dollar due to higher import prices and weaker global growth, no tariffs means stronger global trade and a more robust global growth backdrop.”
Trade War Risks
Charles Wang, Chairman of Shenzhen Dragon Pacific Capital Management Co, cautioned, “You don’t expect Trump’s inauguration to trigger a big rally, as it’s unrealistic for Sino-U.S. ties to suddenly reverse.” Kiyong Seong, Lead Asia Macro Strategist at Societe Generale, added, “While there was no immediate tariff imposed on China, providing some relief to the market, President Trump has initiated tariffs on Canada and Mexico.”
Asia-Pacific Perspective
Shoki Omori, Chief Global Desk Strategist at Mizuho Securities, said, “Twenty-five percent looks high as a starter, and markets reacted quickly, especially in FX.” Charu Chanana, Chief Investment Strategist at Saxo, noted, “The first few hours of Trump administration has underscored that policy environment will be dynamic once again and markets should brace for volatility.”
Hope for Resolution
Andrew Swan, Portfolio Manager at Man GLG, expressed optimism, saying, “I’ll say one positive surprise we may see this year is actually some sort of resolution between U.S. and China from an economic point of view.” Vis Nayar, Chief Investment Officer at Eastspring Investments, added, “Tariffs are necessarily an overhang. I think we should expect volatility, but there is hope that there is some pragmatism.”
Leave a Reply