There is a downward tendency in stocks around the world, as concerns about the effects of a trade war on the economic situation have intensified, with an increase in flight to short-term bonds, gold, and safe haven currencies.
Equities are falling from New York to London and Tokyo. Against the background of this tendency, the S&P 500 is almost erasing its $3.4 trillion post-election rally.
The United States imposed the largest set of new tariffs on imported goods in almost a century. In this case, it means levies on the part of the US against products shipped from Mexico, Canada, and China. It is worth noting that the retaliatory measures were immediate. Against this background, economic experts have made numerous statements that a large-scale trade war is beginning in the world. The corresponding situation has become a kind of alarming pressure factor on market sentiment. It is worth noting that a trade war as a configuration of reality a priori cannot be favorable in terms of its impact on the global economic situation. Confrontation is not a factor contributing to economic growth.
Trade tensions have triggered concerns about the prospects for gross domestic product (GDP). In this case, the prospects of the mentioned indicator are implied both regionally and globally. Traders are fully pricing in interest rate cuts of three-quarters of a point in the current year by the Federal Reserve.
US Treasury Secretary Scott Bessent expressed confidence in the tariff plans, despite the fall in the stock market.
As noted by the media, the stock market is a way the President of the United States, Donald Trump keeps score. In the relevant context, attention is drawn to the fact that Wall Street recorded a corresponding feature during Mr. Trump’s first presidential term. In this case, a kind of theory was formulated according to which Donald Trump’s penchant for using securities as a report card meant any policy that rattled the market would force him to revise his plans. However, as noted by the media, currently, against the background of falling stocks, professionals in the investment area are beginning to doubt whether there is a so-called Trump Put at all.
The S&P 500 showed a decline of 1.4%. The Nasdaq 100 fell 0.5%. The Dow Jones Industrial Average declined by 1.7%. A gauge of the Magnificent Seven megacaps dropped 0.1%. The Russell 2000 declined by 1%.
The yield on 10-year Treasuries increased by four basis points, reaching 4.2%. The dollar gauge fell by 0.6%.
Clark Geranen at CalBay Investments stated that it is extremely difficult for investors to make decisions based on tariff news. According to the expert, they should avoid any drastic portfolio moves at this stage. Clark Geranen suggests that the tariffs coming into effect on Tuesday, March 4, are rather a negotiating tactic, and not the beginning of a long and drawn-out reciprocal trade war. At the same time, the expert noted that in such situations, investors sell first and then ask questions.
At Miller Tabak, Matt Maley stated that the market and several of its major stocks are becoming quite oversold. The expert expects a deep correction at some point in the current year but notes that it will not come in a straight line.
Daniel Skelly, head of Morgan Stanley’s Wealth Management Market Research & Strategy Team, stated it remains to be seen whether some of the bearishness surrounding tariffs will dissipate now that they have actually been implemented.
As we have reported earlier, Claudia Sheinbaum to Announce Tariffs Countermeasures.
