“I don’t like Mondays”
Boomtown it’s not been on the last couple of Mondays. We had the technology reversal due to DeepSeek last week, and this Monday, growth stocks went sharply into reverse after Trump’s tariff announcements over the weekend. The good news is, just like last week, the markets have recovered their poise.
Interpreting these short-term moves is extremely difficult as is working out the perception and sentiment of the markets. As reported in the ft, one Foreign Exchange Trader at a European bank apparently said “My head hurts. It’s almost impossible to trade, there’s too much news to process. Buy? No, wait. Sell? No, actually buy or, just give up!”
Thank goodness we don’t try to day trade! Many argue this is where trackers come into their own. Don’t try to buy and sell or second guess the market. However, I would argue that volatility provides opportunities for fund managers who have conviction. More on this later with some great information from EPIC Investment Partners.
In the meantime, Far Eastern, European and UK markets have largely outshone US markets so far this year. Who’d have thought that, after all the negative press!
Growth is sluggish in the Eurozone and the UK, and this has led to central banks cutting interest rates, with the Bank of England (BoE) reducing the rate by 0.25% on Thursday. In the US however, Trump’s policies are expected to be inflationary, meaning the Federal Reserve is seemingly more hesitant about reducing rates.
With market volatility there is a demand for ‘alternatives’. JPMorgan highlight why alternatives are worth considering for portfolios and which ones to consider.
On this week’s agenda:
- Tariffs arrive
- Europe and UK outperform the US
- Will active management be the beneficiary?
- Alternatives for a changing world
- Summary
Tariffs arrive
We thought they were coming; the markets breathed a sigh of relief that they wouldn’t be too penal, and now the first volleys from the White House suggest that this is just the start of things to come. Of course, two can play at that game and the Chinese volleyed back tariffs of their own on US exports. What then happens? The Hang Seng rises by 2.83% on Monday.
Then, lo and behold, Mexico and Canada (who should be the 51st State by the way, according to Mr Trump!) have managed to negotiate a reprieve for a month. What we don’t know is who is next, whether tariffs are temporary or permanent and whether they are truly a bargaining chip.
Whilst markets pulled back, they didn’t overreact, suggesting that the ‘tariff bark may be worse than the bite’. In the meantime, we feel market movements are presenting opportunities.
It’s quite interesting how the globalisation of 10 years ago is being turned on its head.
Continues…
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