What a surprise!
I went to watch the Bournemouth Symphony Orchestra on Wednesday night. When I went into the auditorium, the data outputs across markets were mixed and, frankly, it was a relief not to be casting a glance as to what was unfolding in the US.
In the car, I listened to the end of the PSG v Aston Villa game and when I got home, I thought I should look at the markets to prepare myself for tomorrow. Wow… was I reading it right? The S&P 500 is up by 9.52% and the Nasdaq is up by 12.16%.
Whilst I was surprised at the timing, I wasn’t thrown by the reactions across markets. Earlier in the week, we had already seen the Nikkei 222 rise by just over 6% on news that the Japanese government were first in the queue to strike up a negotiated tariff agreement. Overnight on Wednesday, the index rose by 9.13%!
Previously, I warned how quickly things could change and here was a prime example. There are no doubts that Trump loves the power he has but perhaps he’s not loving the severity of the backlash, not just from other countries but in his own backyard.
Yesterday we saw equity markets sell-off in the US over fears of recession, on the back of the trade wars between the US and China. The dollar has weakened over the last few days against the likes of the euro. Fixed interest bonds which proved so resilient last week have come under pressure. This whipsawing of markets is expected to continue for some time.
From what I can gather, Trump expected China to respond with their own version of tariffs which manifested in him elevating the tariffs already imposed on China. I’ve stated previously that Trump’s biggest bugbear is China and this is playing out.
Of course, there is only a 90-day reprieve for tariffs allowing countries that haven’t retaliated with their own penal tariffs to negotiate better terms. Clearly, there will be some ground conceded by both parties with Trump likely to have the upper hand.
The question is what’s going to happen next?
It’s been difficult to keep abreast of events over the last five days, never mind trying to predict what’s going to happen in the next 90 days. Is this the end of the turmoil? I very much doubt it, but it does show that there is a market appetite for investing when there is the perception of calmer waters.
As there has been so much coverage this week as a result of the monumental announcements on Wednesday, I’ll keep this update relatively short.
On today’s agenda:
- What’s happened?
- Why have tariffs been paused?
- What is the landscape with China?
- Markets are whipsawing
- What happens next?
What’s happened?
I’m sure we all know by now, so I’ll keep this bit really brief. On Wednesday 9th April, Trump announced that the tariffs for many countries would be subject to a pause of 90 days. This was just hours after previously announcing the tariffs came into immediate effect. Imagine being a Customs and Excise Executive in the US at the moment. What a job!
Continues…
Want to get this in your inbox?
Our CEO, Gary Neild, writes engaging Market Commentaries every week. If you would like to receive the full version straight to your inbox every Friday, please join our communications list.
Risk warning
Please Note: This communication should not be read as giving specific advice regarding your personal circumstances. This would only be given following detailed assessment of your individual needs. The value of investments may fall as well as rise; you may get back less than invested. Past performance is not necessarily a guide to future returns.
