Investors are expressing growing concerns about America’s new approach to global trade. So far, these doubts haven’t caused any major backlash, but they are paving the way for a tumultuous future. Many financial sectors erased losses despite growing political controversy. U.S. stocks are back on the rebound after recovering from earlier losses. The dollar & Treasuries also experienced little change after surviving a rough week. Gold hit its highest levels in two weeks, while crude slumped to $48 a barrel. Things are equally tense in Europe as Britain prepares to leave the union on March 29th.
Stocks Recover as World Prepares For More Controversy
“As the world’s Nr. 1 is preparing to set significant barriers against the world, investors are increasingly worried,” Ipek Ozkardeskaya, a market analyst at London Capital Group, wrote in a note. “The uncertainties regarding the U.S.’s relationship with the rest of the world” are weighing on equity traders’ sentiment, he said.
Out of all the political controversies going on around the world, Trump still manages to steal the show. His bold attempts to redefine global trading terms is sending international investors into a frenzy. This sparked a Group of 20 meeting dedicated to resisting protectionism. At this event finance ministers worldwide scrambled to come up with a plan for America’s possible new trading terms. There is still no clear plan, but all the participating leaders vowed to fight Trump.
Even though its embroiled in controversy, American finances are still on track. The dollar managed to curb losses after the Federal Reserve sent the greenback into a vicious slump last week. According to the Bloomberg dollar index, it only fell 0.1%. This was a welcome break as the greenback experienced its fourth straight loss. U.S. stocks also held steady after erasing early losses. At the end of the day, the S&P 500 gained 0.1%. This left it at 2,379.25, which defied earlier predictions. Rising real estate & technology shares fueled this surprising comeback.
Faced with political uncertainty, European stocks dropped while currencies held steady. Controversial elections in France & Britain’s inevitable exit from the union wreaked havoc on the market. Oil & gas companies suffered the most with 0.9% losses. The Stoxx Europe 600 Index also took a blow, slipping by 0.1%. Even though the stock market looked gloomy, the euro is on the rise. In total it climbed 0.1%, leaving it at $1.0752. The British pound held steady as it prepared to exit the union on March 29th. It settled at $1.2393, which showcased the country’s determination for change.
Commodities reactions to the swirling controversy were equally mixed. Crude plummeted while gold continued to enjoy a fresh comeback. West Texas Intermediate crude experienced a 1.4% slide, leaving it at $48.11 a barrel. This gave oil a shocking 11% loss this month, putting it on track for the steepest one-month slide since July. In stark contrast, gold gained a solid 0.5%. This left it at $1,232 an ounce after its fourth day of gains. Base metals didn’t share this optimism, with copper falling 0.2%, while nickel slid by 0.7%.
These tumultuous reactions are set to continue as the world braces for more political controversy. Between Brexit & Trump, the future looks increasingly volatile across every major financial sector. If France decides to join the controversy, the market will become even more unpredictable. The only thing investors can do is brace for a bumpy ride, since the show is far from over.