 Speculation surrounding the incoming US administration's tariff strategy continues to rattle global markets. Reports suggest that President-elect Donald Trump’s economic team is exploring a phased approach to tariffs, gradually increasing rates by 2% to 5% per month. This tactic, if adopted, would utilize executive powers under the International Emergency Economic Powers Act to maximize negotiation leverage while reducing immediate inflation risks. However, the proposal is still in its infancy and has not yet even reached Trump for approval, leaving markets to grapple with the uncertainty. The potential for a measured tariff escalation has brought mixed reactions across asset classes. US equities displayed divergence overnight, with DOW rallying on diminished fears of abrupt trade disruptions. In contrast, NASDAQ underperformed, partly as investors rotated out of tech-heavy growth stocks. Meanwhile, Asian markets presented a fragmented picture—Hong Kong and China posted robust gains, buoyed by optimism surrounding trade resilience, while Japan’s Nikkei suffered steep losses. In the currency markets, Dollar is taking a breather as it consolidates recent gains. The greenback has been the weakest performer of the week so far, as traders await critical US economic data, including today’s PPI and tomorrow’s CPI. Sterling remains under significant pressure, ranked as the second weakest currency, weighed down by ongoing fiscal concerns in the UK. The Swiss Franc is close behind as third worst. Conversely, commodity-linked currencies are leading the charge. Kiwi is the top performer, benefiting from improved risk sentiment, followed by Aussie and Loonie. Yen and Euro are mixed in middle positions.... |
