"Growing Comfort" with Trump Tariffs: Wall Street Remains Calm amid US Trade Uncertainty
Increased U.S. Tariffs bring Financial Strain to Wall Street
Wall Street's response to Donald Trump's announcements of new tariffs has significantly changed - traders appear to have grown comfortable with such moves, and his latest declarations no longer shake the stock market. In fact, indices are on the rise.
This phenomenon, ironically referred to as "habituation", suggests that investors have grown accustomed to Trump's unpredictable tariff policies. They now anticipate retractions or adjustments, leading to a predictable market response: buying into market dips in expectation of a recovery once tariffs are clarified.
The US President has announced a hike in tariffs on steel and aluminum imports to 50 percent effective June 4, and ongoing tensions between the US and China threaten to derail recent trade agreements. Yet, Wall Street remains calm, with the Dow Jones Index, S&P-500, and Nasdaq Composite experiencing slight gains.
Preliminary figures show that 1,264 gainers outweighed 1,487 losers on the NYSE, reflecting this trend. However, the lingering uncertainty concerning the evolving trade conflict remains significant.
Market strategist Jim Reid of Deutsche Bank said, "It's really difficult to keep up or predict what's happening in trade right now. For the moment, it seems likely that tariff uncertainty will persist, even if we've probably passed the peak of US policy aggression."
Market Moving Factors
Retaliatory Measures
US President Trump's proposed retaliatory measure against foreign governments containing 20 percent tax on foreigners with US investments could reduce demand for some US assets and weaken the dollar, according to analysts. The dollar index witnessed a 0.7 percent decline, with the fall attributed primarily to the resurfacing tariff issue.
Increased Debt Concerns
The high level of US debt has raised concerns among investors. Jamie Dimon, CEO of JP Morgan, has warned that the US bond market could come under pressure due to the soaring US debt. The mere discussion of a US default, dismissed by US Treasury Secretary Scott Bessent, has sparked worry.
Gold and Oil Prices
Investors flocking to the perceived safety of gold during the re-escalating trade conflict boosted its price by 2.8 percent, with prices reaching $3,381 per ounce. News from Russia fueled the rise in oil prices, as Brent and WTI prices increased by up to 3.8 percent.
Steel Stocks on the Rise
US tariffs on steel and aluminum imports have led to a surge in shares of steel-producing companies, such as Cleveland-Cliffs, Steel Dynamics, and Nucor, which saw gains of 23.7, 10.3, and 10.1 percent, respectively.
Apple Challenges EU Decision
Apple is contesting a decision by the EU's competition authority to make its iOS operating system more compatible with products from competing tech companies under the digital markets act. Meanwhile, Qualcomm's takeover offer for Alphawave IP Group has been extended for the fourth time by the UK's takeover panel.
Biontech Secures Partnership
Biontech shares soared by 18.1 percent after signing a multi-billion dollar deal with Bristol Myers Squibb to develop and commercialize its antibody candidate "BNT327".
Sources: ntv.de, toh/DJ
Wall Street
Investors' growing comfort with Trump's tariff announcements could lead to reduced market volatility, increased investor confidence, and broader impacts on economic decisions, global trade dynamics, and investment strategies. Coupled with the predictability of Trump's tariff policies, this habituation effect reflects a broader adaptive response to the ever-changing trade landscape.
- The Commission, comprised of market strategists and analysts, has noted a habituation effect on Wall Street, where investors have grown accustomed to the unpredictable tariff policies of the US President.
- In light of growing comfort with Trump's tariffs, finance experts are anticipating increased investment in the stock-market, particularly in sectors like steel and technology, such as steel-producing companies and tech giants like Apple.
- The habituation effect also extends to the realm of politics and general-news, with the ongoing trade tensions between the US and other nations influencing the strategic decisions of investors, including those involved in international business and finance.
