Investment Clock insights

The Donald dip becomes a Trump slump


Trevor Greetham

23 March 2018

Stock markets have fallen back sharply towards their February lows. While the initial bout of market weakness this year was blamed on rising wage inflation and fears of higher interest rates, this time round it’s in reaction to President Trump’s announcement of a range of tariffs on imports from China. 
 
Although equities have taken a battering since the market melt-up at the turn of the year when US corporate tax cuts were the focus, these moves aren’t so unexpected. It’s quite normal for markets to remain edgy for a month or two after such a sharp reversal and a move back towards the initial lows is not surprising. 
 
Given this weakness, we’re once again adding to equities and remain overweight stocks in the multi asset funds we manage. It’s noteworthy that commodity markets haven’t reacted particularly badly to the tariffs spat and emerging market equities are outperforming in the sell-off, both signs that global growth remains on track. 
 
With profits growing and interest rates still below inflation in major developed economies, the fundamentals and outlook remain positive. 

Stock markets have fallen back sharply towards their February lows. While the initial bout of market weakness this year was blamed on rising wage inflation and fears of higher interest rates, this time round it’s in reaction to President Trump’s announcement of a range of tariffs on imports from China.  

Although equities have taken a battering since the market melt-up at the turn of the year when US corporate tax cuts were the focus, these moves aren’t so unexpected. It’s quite normal for markets to remain edgy for a month or two after such a sharp reversal and a move back towards the initial lows is not surprising.  

Given this weakness, we’re once again adding to equities and remain overweight stocks in the multi asset funds we manage. It’s noteworthy that commodity markets haven’t reacted particularly badly to the tariffs spat and emerging market equities are outperforming in the sell-off, both signs that global growth remains on track.  

With profits growing and interest rates still below inflation in major developed economies, the fundamentals and outlook remain positive. 

Past performance is no guide to the future. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.