Uncertainty looms as markets grapple with Trump's tariff tactics

CGTN Europe

In this insightful discussion, Joshua Mahony, Chief Market Analyst at Scope Markets, explores the uncertainties surrounding recent market volatility. He discusses the potential impacts of U.S. trade policies, the resilience of European markets, and the evolving role of consumer spending.

Transcript

00:00Joshua Mahoney is the Chief Market Analyst at Scope Markets. Great to see

00:05you Joshua. So look you know what's going on? Are the markets overreacting or is

00:09there worse to come? Well quite frankly no one knows and you know what's

00:15difficult about this here is that we don't necessarily know the scope of this

00:19we don't necessarily know whether Donald Trump is using this as a ploy to be able

00:23to get country to come to the table and strike a deal. Remember in his first term

00:27in the White House he ultimately got China to commit to spending X amount of

00:32billion on US goods and investing into the US economy. Maybe that's an endgame

00:36and maybe not you know if it feels like this time around he feels he's a lot

00:41more steadfast in his approach and it also feels like he changes on a

00:46day-to-day basis. It started off being that it was reciprocal tariffs then it

00:50was Liberation Day because he probably didn't want to just have reciprocal

00:55tariffs he wanted to add on top of that. Now we're talking about every single

00:58country out there and we don't necessarily know the size of it nor the

01:01longevity of it and so the rebound we've seen today with the Dow actually in

01:06the green now does point towards some people thinking that Wednesday's

01:10going to be a sell the rumor buy the fact event but that's not given. But what

01:15about the big step up in European defense spending that we've been

01:20hearing about that's coming? Why isn't that balancing out the feared fallout

01:25from US policy changes? Well it has to be honest I mean if you look over the

01:32course of the past month I think the DAX is up 10% and the US market says heavily

01:36down and the fact of the matter is that we will get some domestic spending

01:41that's going to have to counterbalance it but the US consumer is absolutely

01:45massive and the rest of the world has sort of hung on the coattails of the US

01:48consumer and that's why they often have these huge trade deficits. If the US

01:53consumers will spend domestically then these other countries the likes of China

01:56the likes of Europe are going to have to find their own source of demand. Yes that

01:59may be government spending and equity markets can ramp up a little bit off the

02:04back of that but still that's only going to help certain parts of the likes of

02:09the DAX or the European markets and other parts are just going to continue

02:13to feel the force. So yeah defense stocks in Europe looking good but other parts

02:17of Europe certainly coming in the firing line and we're getting closer to

02:21the date so people are sort of getting a little bit more jittery once again. You

02:25mentioned the US consumer which is so important this could have knock-on

02:30effects beyond the stock markets into the broader economy. What's it

02:34going to take to get consumers get spending again and to restore wavering

02:40consumer confidence? Yeah and that's the thing isn't it I mean ultimately you

02:46would think that this is a US first approach and the US is going to be fine

02:50and everyone else is going to be awful that's not necessarily the case we're

02:53now fearing for higher inflation but also a potential recession over in the

02:57US we've seen a collapse in terms of consumer confidence in the US collapse

03:02in terms of the outlook for much of the manufacturing sector and a rising of

03:07prices so certainly for the time being it feels like Donald Trump is front

03:12loading all of the bad news which often does happen because you can just

03:16write off any negativity as a result of your predecessor but certainly soon

03:21enough he's going to have to start coming out with some good news and by

03:23and large that's probably going to be additional spending or tax cuts and

03:27things like that but certainly right now we're in the thick of it and it's all

03:30bad news. It's bad news the stock markets don't like it some investors aren't

03:34waiting for that good news they're piling into gold we're getting you know

03:37record highs again and again what's your outlook there? Exactly I mean look

03:42ultimately before any of this started I sort of looked at the past year and a

03:46bit and thought you know this is the perfect environment for gold to

03:49outperform because generally it does very well when central banks are easing

03:53and this one was telegraphed in the past when we see central bank easing it's a

03:57sudden reaction to a market collapse whereas this time around they had to raise

04:02it to bring down inflation but they always wanted to cut interest rates so

04:06it's benefiting from that anyway and now all of a sudden you're seeing the

04:09breakdown in terms of trade relationships and certainly we've seen

04:13the BRICS nations already starting to move away from US Treasuries moving

04:17towards gold and it feels like that isn't just a BRICS phenomenon now

04:20certainly the latest retail sales out of the UK seeing that people in the UK also

04:24stockpiling gold so right now it feels like the safe haven because the dollar's

04:28also getting hit so people are trying to find that one area of safety and

04:33precious metals appears to be it. Right well we all need to hold our breath I

04:36think until Wednesday. Joshua Mahoney at Scope Markets, thank you.

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