Markets React to Trump Policy Shifts

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Watch Markets React to Trump Policy Shifts - Bloomberg on Dailymotion

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00:00Look, we talk about anxiety in the market. We talk about a government shutdown. We worry about

00:04maybe the push and the pull of trade deals, whether it's with Taiwan, whether it's with

00:07South Korea. And yet, NVIDIA is at a record high today. Micron is at a record high today,

00:12Fiona. Do you just keep on allocating to the AI trade?

00:16It feels like it's that way. I mean, whilst we are seeing pockets of safe haven demand,

00:23so obviously we've seen gold trading at record high. We've seen the Japanese yen is strengthening

00:29against the U.S. dollar. We're seeing equities still remaining very well supported. So I think

00:36there is very much this sense that particularly tech stocks are still attracting a lot of attention

00:43because investors want to put their money somewhere. And big tech in the U.S. remains a solid trade,

00:49you know. And we've still got the outlooks. We'll be getting more information of that when we get

00:55into earnings season. But it does feel that we've had this sort of, you know, gradual climb higher

01:00that's not really letting up, even though there are clearly plenty of risks out there, such as the

01:07shutdown of the U.S. government. But still those, you know, optimism surrounding those Fed rate cuts

01:13is still helping the sector as well.

01:15It is about the macro policymaking, whether or not we get the jobs data on Friday or not, Fiona.

01:20What's happening in Europe? Because I'm looking at ASML is also at 1.3%. Are you getting a pull

01:25across to other regions right now? Yes, I think there has been. And, you know,

01:30it's quite interesting because I think there was a period just recently where Europe was struggling

01:35against the U.S. We were seeing the U.S. climbing to fresh record highs. We were seeing the Nasdaq up.

01:41We were seeing the S&P 500 up. And yet in Europe, we were sort of suffering a little bit on down days.

01:46But I think there is a sense now that that is starting to turn around again. As you said,

01:51there is that sort of pull across that we're getting from the U.S. into tech stocks in Europe,

01:57which is helping. As far as sort of other sectors, there had been a strength in defence stocks

02:03in Europe, which I think has just sort of wound down a little bit. But yeah, as far as tech stock

02:09are concerned, we are seeing some encouraging signs again.

02:14Fiona, a story we did not get to with Bloomberg's Mike Shepard was Taiwan's vice

02:19premier coming out and saying that the country rejects the United States demand

02:24for Taiwan to actively help in bringing 50 percent, half of semi-conductor manufacturing

02:31for the U.S. supply base into the United States. This is a sort of part of the negotiation broadly

02:38on trade with that nation. But it speaks to other things that Caroline outlined to you,

02:43which is the impact of this administration's policy on the technology sector.

02:47What do you make of that? Yeah. You know, I think with this administration,

02:52policy is very much a central part of how markets are responding as to the outlook for stocks

03:01and also for sentiment. As we've talked about, you know, it does feel like this administration

03:06is having a very active role, as we know, in setting out policy and involving themselves

03:12in policy, which is affecting stocks. It's affecting sentiment to a degree. But I think also

03:19that there is a little bit of caution. We're not seeing the same rapid, quick responses that we

03:26used to see at the beginning of Trump's administration, where he would make these

03:32announcements. And we would see a big reaction in stock, big reaction in the markets. We're seeing a

03:37more relaxed response, I would say, to the comments that come out from Trump. Although they are still

03:44there, they're just not making the same impact that perhaps they have previously.

03:49Fiona, did technology investors start looking for opportunities in sectors and companies where

03:55US government might take a stake? Yeah, that does seem to feel like it could be the next one to be

04:03watching for. You know, I think they have been much more proactive in looking for stakes, as we've heard

04:10with the lithium deal as well, that they are keen to get a foot in and perhaps make the US potentially

04:17even more competitive than it is against peers such as China. So that could be the next one to be

04:24watching out for. Fiona, do you see signs of a bubble?

04:27I see that we are high value. There are high valuations at the moment. I mean, that was

04:34something that was noted by Federal Reserve Chair Jerome Powell just a few weeks ago. But I think

04:40really what we need to see is what earnings are going to be telling us. You know, I think there's

04:46going to be a lot of focus on earnings season on forward guidance. I don't think we're in bubble

04:52territory. But I do feel that we are quite overstretched in some areas. But that doesn't

04:57mean to say that we necessarily are going to see a big collapse here at all. I think there is

05:02potential for some consolidation. And if we do get OK readings from the earnings at the end of this

05:10month going to November, then I think that could potentially be a reason, a catalyst for another

05:17leg higher, especially if we're seeing the Federal Reserve cutting interest rates further.

05:22.

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