The buoyant move up in stock prices over the last two weeks was based on the perception of lenient US trade measures. These perceptions produced a sharp U-turn yesterday as President Trump announced the imposition of 25% tariffs on foreign-made cars and car parts effective April 2. The panicky sentiment in the US stock markets from observed last night spills over to global equities this morning.
The US brokered accord between Russia and Ukraine agreeing to a ceasefire on each other’s energy complexes and a truce to hostilities in the Black Sea might be viewed as progress from Washington but with language already being manipulated (by Russia in the main) hours after the announcement, one can only cast doubt on whether this is a turning point.
Ignoring the laws of economics comes with a substantial price tag. Tariffs are ultimately paid by the consumer as so neatly illustrated by the latest stock market slump. So, now that the next clockwork-like policy reversal arrived, this time in the form of a ‘targeted approach’ when applying reciprocal tariffs from April 2, of course, equities rallied. The brighter investor’s mood was also aided by the rise of composite PMIs on both sides of the Atlantic.
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