Update Equities: Trump tariff plans create volatility
Global equity markets are volatile. Early in the week, European stocks were able to keep up with gains in US markets, buoyed by reports suggesting a more moderate tariff strategy from the Trump administration, even as Trump denied these reports. As the week progressed, however, global stocks came under pressure.
US and European futures declined following a downturn in Asian markets. Emerging-markets equities appeared poised for a corr ection, spurred by Trump's threats of additional trade tariffs, which unsettled investors. Japanese and Indian markets were particularly weak, contributing to the overall decline in Asian stocks. In the UK, the FTSE 250 faced a selloff, reflecting growing pessimism.
Health care emerged as the top performer this week, while the consumer staples sector lagged, but then managed to recover slightly by the week's end. Major technology stocks also sold off, as concerns grew that the Federal Reserve might delay interest rate cuts until July, given inflation risks. The prevailing expectation of prolonged higher interest rates in the US could negatively impact growth stocks.
Artificial-intelligence leader Nvidia was a focal point of market attention this week. The company benefited from Microsoft's announcement of a USD 80 billion investment in data centres, although this was tempered by a less favourably received presentation by Nvidia's CEO regarding the company's future. And news of the Biden administration's plans to further restrict the export of AI chips added to the company's challenges.
Kristina Kern