High volatility is driving investors toward safe havens like bonds and Gold
Trump’s tariffs went live yesterday, sending global markets—including the US indices—tumbling, until rumours of a potential rollback started circulating. High volatility is driving investors toward safe havens like bonds and gold, while the Trump-fueled rally in the US dollar index has already reversed.
The DAX got hit by a hefty 3.50% selloff, the CAC 40 fell 1.85% while the Stoxx 600 tumbled more than 2%, the Japanese Nikkei eased to the lowest levels since September and the major US indices – from big cap, tech-heavy to medium and small cap benchmarks – fell below the levels they were trading at when Donald Trump was elected president last November.
The aggressive reaction was curious, though, as investors knew that the tariffs would go live yesterday, suggesting that a clear majority was expecting Trump to make a last-minute U-turn – a thing that he did! There are now rumours circulating that he may roll back some of the tariffs. The DAX futures are up by almost 2% at the time of filming.
Today, investors will watch the US ADP report, and PMI, ISM numbers from both sides of the Atlantic Ocean. While the European investors could brush off bad news on expectation that the US tensions will boost activity sooner rater than later, weakness in the US data will probably be perceived as bad news and should further weaken appetite.
Author
Ipek Ozkardeskaya
Swissquote Bank Ltd
Ipek Ozkardeskaya began her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked in HSBC Private Bank in Geneva in relation to high and ultra-high-net-worth clients.
