Stock prices in the arms industry remain high, despite a decrease in difficulty for Daxton to open.
Week Kicks Off with Tumultuous Trade Tensions💰📉🇩🇪🇯🇵
Stock markets kicked off the week on edge due to turmoil stirred up by US President's decision. On Monday, Trump announced a hike in tariffs on steel and aluminum imports to 50%, effective June 4.
Asian markets closed Thursday in the red, setting a gloomy mood, and Germany's Dax followed suit in early trading, ending 0.5% lower at 23,882 points.
Defense stocks, favored by analysts, have been back in demand. Shares of Rheinmetall climbed 2.4% to €1,929.50, Hensoldt rose 9.7% to €100.90, and Renke jumped 6.7% to €83.60.
However, Infineon slipped 2%, Daimler Trucks fell 2%, and VW preferred shares sank 1.7%.
In Japan, the Nikkei 225 slipped 1.3%, and Chinese stock markets weakened amidst escalating trade tensions.
Sentix's latest investor survey shows persisting loss of confidence in US assets because of the trade chaos, reflected in the strategic bias clearly favoring the euro over the dollar. The euro strengthened, reaching €1.1414 per dollar.
Gold gained 1.9%, trading at $3,355 per troy ounce, and Brent crude oil rose 2.2% to $64.15 per barrel.
On the bond market, the benchmark Bund future dipped 0.2% to 130.89.
This move by the US is part of an attempt to safeguard its steel and aluminum industries, a rationale aimed at countering low-priced imports that undermine domestic producers[1][3]. The decision falls under Section 232 of the Trade Expansion Act, allowing the President to impose tariffs on imports deemed a threat to national security[4].
While the higher tariffs might bolster the U.S. steel and aluminum sectors by reducing competition from cheaper imports, this protectionism could negatively affect businesses relying on these metals for manufacturing, such as downstream industries[3]. The increased tariffs also pose the risk of trade disruptions, particularly for countries that export a substantial amount of steel and aluminum to the US[4].
The broader impact on global stock markets will depend on the extent of trade disruptions and potential retaliations. In a worst-case scenario, heightened trade tensions could lead to a decline in investor confidence and stock prices[4].
In the aftermath of trade tensions, investors are wary of the stock-market, particularly with the hike in tariffs on steel and aluminum imports. Asian markets have already shown signs of vulnerability, with Germany's Dax and other global markets anticipated to follow suit, potentially leading to a decline in investor confidence and stock prices. Under this unstable financial climate, some sectors such as defense stocks may experience growth, while others relying on these metals for manufacturing may face negative repercussions.
