U.S. stocks drifted lower in a holiday-shortened week amid trade tensions, further investigations into pharma and semiconductor imports, mixed corporate earnings, and Trump’s public criticism of the Fed Chair. Global markets responded variably, with Chinese and Indian equities seeing gains on stimulus hopes and positive economic signals, while European financial stocks rose after regulatory changes by the UK.
We continue to recommend diversification as a way to deal with this uncertain period.
As we expected, Trump announced a 90-day pause on most reciprocal tariffs excluding China, which caused the S&P 500 to jump almost 10% in a single day. However, uncertainty around tariffs remains, and fears of a trade war with China. Unless supported by positive news, markets are likely to drift lower. Unexpectedly, US treasuries saw a significant sell off at a time when investors usually look to the asset class as a safe haven. Given the size of this market and its systemic implications, adverse developments here could be very problematic.
