“By observing the current trend of the 500, one might think that recent commercial tensions have had a temporary impact. The US share market hIn fact, the losses suffered following the announcement of the duties, supported by positive signals in the talks between the United States and China, recovered in full. The loosening of the tensions interrupted the tariff escalation, avoiding for now a structural stiffening of global trade “. Underlines it Anthony Willis, Investment Manager DI Columbia Threadneedle Investments.
Share markets in recovery
The S&P 500 S indexI currently places about 3% from the historic tops. In the meantime, the dollar has weakened by 3% compared to the levels touched by the liberation day and the yields of the US Treasury have risen. Even the expectations on interest rates have changed: from five cuts scheduled immediately after the announcement of the rates, the market now serves only two.
The dynamics of this commercial war – explains the expert – I am still evolving, Since just over seven weeks are missing upon expiry of the 90 -day suspension period at the end of which mutual rates could theoretically be reintroduced. Furthermore, before July, further announcements relating to sectoral tariff measures are expected, in particular for the semiconductor and pharmaceutical products sectors, in the wake of what has already happened for the automotive industry. Despite this context, the financial markets seem to interpret the situation as under control, serving a progressive reduction in commercial tensions compared to the initial levels that had aroused strong concerns in early April. Political uncertainty seems to be attenuated, and there is a growing consensus around the hypothesis of a gradual loosening of the duties.
What are the next steps?
On the basis of the model that emerged from the negotiations with United Kingdom and Chinathe prospect of an agreement sule rates appear positive, But the overall picture remains significantly worse than the previous situation. The minimum and maximum rates are becoming more defined, and the basic rate of 10% seems to be the most favorable outcome that can be realistically reachable. However, considering also the additional measures still in force, it is estimated that the overall tariff regime of the United States is now between 14% and 17%, a clearly higher level not only compared to 2.5% last year, but also compared to the historical values recorded in the 1930s. Although commercial tensions show signs of attenuation, the impact on certain countries and sectors will be inevitable. It is unlikely to think that the United States manage to conclude the negotiations with all the partners within the 90 -day window; For this reason, on the weekend it has been announced that some countries receive formal communications in the next 2-3 weeks aimed at reiterating the tariff terms announced on April 2.
Despite the high levels of uncertainty, ” The significant recovery of the markets has led to a minimum adjustment of our strategies. We do not consider it appropriate to further increase exposure to risk and we maintain a slightly positive orientation on the shareholder, with a slight preference for US and European markets. Despite the resumption of equity markets, the strengthening of the tariff regime and the persistent uncertainty will continue to adversely influence the economic prospects, albeit in an extent less marked than the forecasts of a few weeks ago “.
Clarity and timeliness
Fortunately, since the high levels of the rates between United States and China They have entered into force for relatively little time, “the direct economic impact should be contained. However, the race for commercial exchanges prior to the application of the duties, combined with the recent decline in shipments from China to the United States, could generate significant distortions in economic data, temporarily compromising their stability and reliability.”
Consequently, in the coming months the economic data “They could play a limited role in orienting market assessments, due to political uncertainty and short -term dynamics. A waiting period will be necessary to have “clean” data and proceed with a more precise analysis of the economic context.
To contain the negative consequences on the economic level it will be important be timely and clear in future decisions. The spending choices of businesses and consumers depend on large extent on trust, which may take time to be fully restored, particularly in the United States “, he concludes.
