The US shares seem to be exposed to Chinese and sexual geopolitical tensions. Ironically, it is the shares owned in the export sensitive economies, such as China and the European Union, are the ones that have flourished in the expectations of the greatest financial outcome of Trump’s “first” agenda.
On the American side, Trump’s commercial protection agenda appears to have led to reverse results. It seems that the great American technology sector has lost its shine, and has increased the risk of American recession. The early reading of ATLANTA FED is estimated at the real GDP for the first quarter of 2025 a 2.4 % contraction at an annual rate, which is the largest decrease since PandeMic insurance.
Many of this decline comes from imports that were presented before increasing the expected American tariff, which led to a large traction on gross domestic product. It is not yet clear whether this is just a temporary stopping or something more important. The final sales of local producers, which is a more specific measure of the demand of local consumers that exclude exports, grows at a rate of 0.8 %, which may be a better reading of the health of the basic economy.
Trump may put more importance in maintaining government borrowing cost at the expense of the stock market. This is because the Trump party, the Republicans, will be asked of congress in the coming months to raise the limit of the debt roof of more than 4 dollars as part of a comprehensive legislative package to provide its local priorities. Trump will want to show that the US public debt market is stable before a possible “birthday summit” with President Xi in June when both presidents celebrate their birthdays. Trump wants the Chinese to buy more US cabinet in this meeting.
Moreover, in an interview with Fox News on March 10, Trump seemed to talk about long -term interest rates by saying that the American economy suffers from a “transitional period”. This is because it wants the weakest US dollar to support the competitiveness of the United States. In fact, Trump referred to this point in a letter to a joint session of Congress on March 4 when he said: “We need a weaker dollar to restore our manufacturing functions. The strong dollar makes it difficult for our companies to compete worldwide.”
Trump also uses the war in Ukraine, and a threat to remove financial and military support, as a craft for European countries to increase financial spending on defense, and ideally, US military services. In the aftermath of the recent German elections, there is a desire from the leadership of the new government to raise financial spending by reforming the so-called “debt brake”-a mechanism to ensure that budget deficit is kept on a structural basis. This includes more German public spending on infrastructure and open commitment to lifting defense purchases. Basically, this expansion fiscal policy can narrow the growth gap in the United States of European and give the motivation to the euro for the dollar.
On the Chinese side, Beijing uses a hidden response to Trump’s commercial tariffs. President Xi’s last meeting with Jack Ma, co -founder of the technology giant Ali Baba, is designed to show that the technology sector has an implicit approval from the Chinese political leadership.
In addition, the Deepseek version (AI Model by a Chinese Emerging Company) in January did not help the American technology sector as well. Deepseek raises questions about whether American companies should spend a lot of money on computer devices.
China uses its “soft power” to weaken the United States’s dominance in the financial markets and its decrease in its economy to enhance the country’s negotiations before President Trump-eleventh summit of them to discuss trade and investment.
It can be said that the main fast food of investors from the recent Chinese geopolitical geopolitical tensions is that the US dollar has decreased. This adds support to American stocks in several ways. First, they become cheaper for non -United States investors. Second, basically, the weakest US dollar should enhance the profit of multinational companies from abroad when translated into the homeland. Third, the dollar’s weakness indicates that there is more currency of the currency. This is likely to create financial conditions for shares to recover from excessive sales levels. The money must return to risky assets.
The decrease in the price of shares in the last United States means the assessments of the so -called “Seven” (Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA and Tesla more convenient. For example, the total price to the profits is 40 % forward compared to the rest of the S&P 500 in the United States, and it is its lowest level since 2018.[1] NVIDIA is circulating 24 times an evaluation of profits, which seem relatively attractive given high profit margins and rapid growth in the expected sales over the coming years of demand for artificial intelligence.
The Treasury returns in the United States currently for 30 years is 4.6 %, a decrease of 0.4 % of the peak in mid -January. Basically, given that mortgage rates are priced at a long -term cost of government borrowing, less money is spent on paying interest payments, which may give a payment to the housing market to pay economic growth. Low cabinet revenue also supports stocks by making stock assessments appear more attractive to government bonds.
Although it is in the early days, the hunting operations seen in the stocks do not seem to have led to a decline in consumer expenses. This is because with the slowdown of inflation and the created functions, the salaries of the real wage of the house have grown about 2 % in January. Moreover, the cancellation of organizational restrictions and expected tax discounts must pay. The Patriotic Union of Independent Business Scan (Parmerm of Small Business) explains that employment intentions are at their highest levels in more than a year. More importantly, this must give consumers confidence to shopping.
Providing the American economy continues to grow in a relatively healthy clip, and this increases the chances of companies expecting to profit profits. Since consensus is expected to grow in MSCI USA profitability per share (EPS) by 12.1 % in 2025, a modest reduction of 14.5 % at the beginning of the year. However, in early January, the arrow’s profitability of 2026 to 14.5 % was reviewed from 13.2 %.[2] In general, there was no little change in the company’s profit expectations at the average of this year and the average.
To summarize, American stocks felt unconfirmed geopolitical tensions in China and the United States. In the upscale direction, “the seven” arguments of “amazing” stocks were adjusted at more reasonable levels. It seems that the US dollar has reached its climax to create favorable financial conditions. Moreover, economic expectations are still encouraging, supported by consumption and the labor market, but with increasing negative risks of uncertainty in politics.
Trump appears to be ready to tolerate the short -term volatile markets to achieve his long -term goals of weakening the dollar and maintaining the cost of government borrowing to finance his local priorities. Because it will still need to find a common ground with the eleventh president in the summer.
Daniel Casali is the largest investment strategy in Evelyn Partners
“Five reasons for the expectation of American shares were originally created and published by Banker International, a brand owned by Globaldata.
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