Wall Street's Desensitization to Trump's Tariff Announcements
Escalating US Tariffs Not Burdening Wall Street Institutions
It seems Wall Street traders have become immune to President Donald Trump's tariff announcements, as his latest round of increases failed to ruffle the stock market. The Dow Jones, S&P-500, and Nasdaq all climbed higher following initial slumps. Market analysts attribute this trend to a phenomenon known as habituation.
Traders have grown accustomed to the rollercoaster ride of Trump's tariff policies, with some developing a keen knack for anticipating policy reversals. The trading floor slang "TACO" – Trump Always Chickens Out – illustrates the prevailing sentiment. Traders have learned to leverage this volatility, quickly readjusting their positions to minimize losses and, at times, capitalize on the market's unpredictability.
Despite this apparent resilience, uncertainty looms over the future of the US-China trade negotiations. As both nations accuse each other of breaking recently agreed-upon deals and the handling of rare earths raises fresh concerns, the fragile peace between the two economic giants could crumble.
Market strategist Jim Reid of Deutsche Bank remarked, "It's challenging to navigate the current state of trade affairs. It's unlikely that tariff uncertainty will recede anytime soon, even though we might have surpassed the peak of US policy aggression."
On June 4, Trump announced a doubling of tariffs on steel and aluminum imports to 50 percent. The following day, the Dow Jones index gained 0.1 percent, the S&P-500 closed 0.4 percent higher, and the Nasdaq Composite went up by 0.7 percent.
While financial markets may have developed a thick skin when it comes to Trump's tariff policies, the implications of this ongoing trade conflict are far-reaching. Companies might choose to diversify their supply chains, reducing their dependence on either the US or China. This dynamic could lead to increased uncertainty in global trade, potentially impacting economic growth and future trade policies.
Gold's Safe Haven Appeal
Gold, often deemed a safe haven asset, benefited from the declining dollar and renewed concerns surrounding the US-China trade conflict. The troy ounce rose by 2.8 percent, attracting investors wary of the market volatility. Headlines from Russia also contributed to the upward trend in oil prices, causing both Brent and WTI to jump by up to 3.8 percent.
The resurgence of the trade conflict coupled with rumors of a "revenge tax" on foreigners with US investments has put pressure on the dollar. The proposed measure could reduce demand for US assets, fueling concerns about the domestic and international economy. Traders have attributed the dollar index's 0.7 percent drop primarily to the re-escalating tariff issue.
Sector Highlights
Steel companies such as Cleveland-Cliffs, Steel Dynamics, and Nucor saw significant gains following the US tariffs on steel and aluminum imports, soaring by 23.7 percent, 10.3 percent, and 10.1 percent, respectively. Tech giant Apple is challenging the EU competition authority's decision to force the company to make iOS more compatible with competing products under the Digital Markets Act.
Mainz-based biopharmaceutical company BioNTech partnered with Bristol Myers Squibb for the development and commercialization of its antibody candidate "BNT327," marking a deal worth billions of dollars. Biontech shares rose by 18.1 percent.
The takeover offer by US chipmaker Qualcomm for Alphawave IP Group has been extended for the fourth time by the UK takeover panel. Ready-meal manufacturer Campbell's beat market expectations in the third quarter but issued a negative outlook, causing its shares to rise by 0.7 percent.
Sources: ntv.de, toh/DJ
- The Commission, given the ongoing US-China trade conflict, is investigating the potential impact of a proposed "revenge tax" on foreigners with US investments, causing concerns about the dollar's demand and the domestic and international economy.
- In the world of investing, some businesses are looking to diversify their supply chains due to the unpredictability of the global trade issues brought about by policy announcements, which could lead to increased uncertainty in future trade policies and economic growth.
- In the realm of business and sports, athletes might find a new avenue to secure their financial future as some have begun exploring investments in the stock market, making use of their newfound wealth and leveraging their personal brands to attract financial backing from investors.
