Markets are rising on hopes that there is room for negotiation on Donald Trump’s harsh raft of proposed tariffs.
Following falls of 10% or more across the world’s major stockmarket indices triggered by the 2nd April Rose Garden announcement, shares appear to have stabilised.
The optimism stems from indications that many countries have approached the US government in search of a deal to reduce or remove tariffs, and officials there are engaging with them on the matter.
China appears to remain completely at odds with America however, having said it will put a retaliatory additional tariff on US goods in place.
“After multiple punishing sessions, stock markets appear to have started their road to recovery,” said Russ Mould, investment director at AJ Bell.
“Asia led the way, including a 6% advance from the Nikkei after Japan effectively jumped to the front of the queue for tariff negotiations with Donald Trump. Reports that Japan would get priority status for talks fired up markets in hope of a resolution.
“Trump has the same end-goal for the countries on which he has imposed new tariffs. He wants to make it easier for US companies to do business overseas, for the partnering countries to buy more US goods, and for the US to get its hands on strategically important assets such as natural resources.”
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“The brief flutter of excitement yesterday when rumours circulated that Trump was about to impose a temporary pause on tariffs [excluding China] resulted in a big but brief rally in US markets. While the White House quickly rubbished those rumours, it was enough of a window into what might happen with markets if Trump was more accommodating.
Mould sounded a note of caution however. “It’s dangerous to think a massive rally will definitely happen, given how Trump is unpredictable, but the ‘just imagine’ thought will now be firmly engrained in investors’ minds. Investors need to take each day as it comes, and Tuesday got off to a good start.”
Matt Britzman, senior equity analyst, Hargreaves Lansdown, added: “Investors are waking up to a positive sight for once, with markets opening higher across a broad range of European indices and the FTSE 100 up 0.9% at the open.
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“However, this should hardly be seen as the end of the trouble, especially with President Trump showing no signs of easing his stance on perceived trade imbalances, having doubled down on China. Still, there is a glimmer of hope, as Japanese markets are up nearly 6% following news that trade talks will begin in a few days. The sooner deals are reached, the quicker companies and investors can gain some clarity on the lay of the land.
“Yesterday was a wild ride for US markets, opening sharply down before staging an intra-day recovery, with the tech-heavy Nasdaq closing in the green,” Britzman continued. “Futures indicate a positive open this morning, but volatility remains the only certainty at this point.
“Company earnings are just around the corner, which may provide a welcome distraction. However, management teams are facing a tough patch, with difficult decisions ahead on how to navigate the tariff storm. Expect a lot of cautiousness, and possibly even a lack of quarterly guidance in some cases, as uncertainty takes centre stage.”
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