Global Market Volatility Driven by US Trade Policy Uncertainty | Errante
Market Overview
The global markets remain tense as the United States (US) faces crucial decisions on trade and international relations. Earlier hopes of improving ties between the US and China may not materialize, as reports suggest President Donald Trump is considering new penalties on Beijing. This uncertainty is creating apprehension in Chinese and global markets. Similarly, trade relations with Europe and North America are also unclear sparing uncertainty.
Fundamental Factors
US-China relations are at the forefront of global economic concerns. Initial optimism about a possible deal between the two nations has faded, with the US now indicating a stricter approach. New penalties could affect Chinese stocks and spill over to other markets globally.
In Europe, US Vice President JD Vance recently remarked that Europe’s key issues are internal rather than external threats like China or Russia. However, Europe still faces risks of US-imposed tariffs on certain goods. Though there has been a delay in introducing these tariffs, the possibility remains. On a positive note, President Trump’s congratulatory message to Friedrich Merz after his election win in Germany offers hope for stronger transatlantic ties. Even so, market is cautious about the future relationship between the US and Europe.
Closer to the US, attention has shifted to its neighbors, Mexico and Canada. Both countries narrowly avoided duties being imposed in early February by agreeing to send troops to guard their borders with the US. This agreement, however, only provides a temporary reprieve until March 1. Markets are now concerned about whether Trump will proceed to impose a steep 25% tariff on their goods. Such a move could seriously affect the Mexican Peso and Canadian Dollar, adding further pressure to these economies.
Technical Analysis
DAX opened today in yesterday’s market profile value area (106.66 – 106.28) and is below the 200 EMA on the H1 and H4 charts. This indicates a range since the current price action has not yet been able to break the highs and lows of the previous day’s value area. There is no clear price action for now.
Conclusion
The uncertainty in US trade policies is causing significant concern for global markets. While any new penalties on China could heighten tensions, Europe is not entirely in the clear either, as potential tariffs continue to cast a shadow. Meanwhile, Mexico and Canada face financial challenges, with investors awaiting decisions that could shape their trade relationships with the US. The coming weeks will play a crucial role in determining the economic direction for these regions.
Find us on
