Market update perspective with MLC
Key takeaways • The disorderly rollout of America’s new trade policy has rattled sharemarkets (Chart 1), and investors must prepare to navigate greater uncertainty and volatility through Mr Trump’s four-year presidential term. • Global sharemarket returns have been strong over the past two years driven mightily by investor appetite for US technology stocks, especially the Magnificent Seven (Apple, Microsoft, Google’s parent Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla). This trend resulted in such stocks’ valuations hitting great heights, which has left them as well as markets vulnerable to a correction. • We estimate that for every 1% increase in effective tariffs, US GDP declines 0.05%. • While the trade stoush is a headwind, President Trump’s tax cutting and deregulatory ambitions are a counter-veiling force and thus we expect US corporate earnings to be higher over 2025, which may boost investors’ morale. • Current events are a reminder that macroeconomic factors are ever present, sometimes with more force than usual, [...]
