Investor sentiment can turn on a dime; all that is needed is one social media post by the US president. For now, however, economic and oil prospects are increasingly cloudy. US allies and foes are uncertain in their response to the disruptive agenda of the administration, but US consumers are not so hesitant. Their confidence deteriorated hastily this month. The Conference Board’s measurement of the US consumer mood has fallen at its fastest pace since August 2021 as inflation expectations have risen sharply. Do not rule out further worsening of confidence. The US House has passed a resolution to cut taxes and spending, which, according to analysts would sharply increase the budget deficit. As President Trump has always wanted to finance this widening imbalance by import tariffs, expect an intensifying trade war between the US and the rest of the world with unpredictable economic repercussions.

On the geopolitical front, Ukraine agreed or, depending on one’s view, was coerced to agree on a mineral deal with the US to jointly develop natural resources without firm security guarantees. It seems a risky, albeit probably necessary bet by the Ukrainian side. It also signals the US determination to follow the same path all over the world, with Canada, Greenland, Russia and the Taiwanese semiconductor sector being the prime examples. The global economic status quo has irreversibly been upended with potentially damaging medium to long-term consequences. The demand side of the oil equation is anything but encouraging and in case of a so-called peace deal between Ukraine and Russia brokered by the US the supply side will also dash bullish hopes. And Mr Trump will ultimately achieve his target of lower oil prices.

Don’t Look Now but the Markets are Becoming Unimpressed

It is unsettling to see the leaders of the second and third largest economies of Europe wandering across the pond to placate a US President who has styled himself as a diplomatic hand grenade. When Mr Trump blows convention apart with an aim to build it back again in a deal that is supposedly favourable to all parties, in this case the Ukraine war, it is hard not to consider it is more realistically for his own domestic political standing. President Emmanuel Macron skilfully leaned upon a rapport developed during Trump I and the meeting portrayed accord. Yet, a telling difference is how the US President refused to name Vladimir Putin as a dictator or deem him the aggressor in the conflict. When the French President suggested European peace keeping boots on the ground, why would it be contested? The US has no interest in sacrificing its troops, Trump has said Ukraine should be a European problem and with such a military concession one must conclude that the American deal maker is taking steps to getting his own way. Before the British Prime Minister Keir Starmer arrives in Washington, he has already made public the UK’s intention to bring forward an increase of spending in its military by 2.5% of GDP by 2027, again an appeasing move to a rightful US complaint. Whether or not the meetings this week can convince the mercurial Trump that Europe’s, including the UK, and the US’s interest in Ukraine are the same will remain unclear until the next social media rant and what Trump really thinks.

Meanwhile, the suppressant of Ukraine negotiations is added to the tariff talk which is slowly winding up again. Risk takers still have the ring of tariff moratorium and negative profit and loss numbers to accompany after the about-face during the weekend of 2-3 February when President Trump surprised the world by giving Mexico and Canada a delay to 25% trade restrictions. However, ‘T-Day’, as coined by market observers, is creeping up in the diary. The tariffs are due to be implemented on March 4th and just to stir the pot, Mr Trump said tariffs are on time and are going forward. Investors do not know what to believe and are made even more uncomfortable by the US imposing tighter microchip controls on China and stopping allies such as Japan and the Netherlands from undertaking further technology exports bound there. As an aside, and in evidence of tariff retribution being planned for is the steel and metals action plan which the European Commission is drawing up. Predicting the fallout of tariffs or their on/off application is impossible. Markets will hunker down, shutter and adopt lower risk profiles. Geopolitical and investment unpredictability are set to haunt markets for some time yet.

The US markets are also posting warnings of a current dip in confidence. Pre-election, investors lined up waiting to join the ranks of the Trump Trade. The US Dollar, Bitcoin and Gold obliged by embarking on a rally as a brim-full of owning stuff swept in FOMO fashion across the counterintuitive correlative divide. Promises and expectation of lower taxes, lower oil prices and a US economy that would be unfettered from regulation, lower civil spending and repatriated industry vouched for opportunity and investors bought in. However, and latterly, Bitcoin has broken down through $90,000 and is at lower levels not seen since November 2024. In the middle of the same month, the US Dollar Index (DXY) was registering 106.20, it pushed on to 110.00 just before the inauguration and has now swooned back from whence it came. Gold has fared much better but is not entirely a Trump trade and remains the trusted home for global investor flight. Yet, the distinction has not prevented it from correcting by $100/ounce in just one day. The Nasdaq 100 has admittedly been bashed around by the DeepSeek news, but after recovering, in one week has lost 10% of its value, the S&P 500 3% and even the DOW is down by 4%. Some of the Bitcoin losses can be explained away by suspected foul play in associated global crypto exchanges, but naysayers will point out that reducing regulation means nefarious practices become easier. There is little doubt that Nvidia this evening will have a large say in confidence, but the data needs to be stellar or more evacuation across the wider suite will continue with Trump trade gains possibly zeroed.

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