CEO House View | Tariff Risks and Ceasefire Hopes: Three Forces Shaping the Market Outlook | Blog

Dear all,

In February, global equity markets saw a shift as previously underperforming regions emerged as frontrunners. European and Russian stocks surged, reflecting a rising probability of Russia-Ukraine peace talks ending the war. The Hang Seng Index and the CSI 300 benefited from the tech-driven rally led by DeepSeek. Meanwhile, U.S. equities briefly hit a new all-time high before seeing a modest pullback, and we’re starting to see more rotation overall. The U.S. Dollar Index and Treasury yields retreated during the month, indicating ample liquidity. Gold reached new highs, while oil prices remained at a safe level of around $70 per barrel.

February was dominated by news headlines, particularly with Trump wielding tariff threats on a global scale. A key difference from his previous term is that his policy directives are being implemented more swiftly and broadly in scope, moving from targeting specific goods to almost broad-based coverage. This is also starting to manifest in forward-looking economic indicators—February’s UMich one-year inflation expectations rose to 4.3%, while the 5-year expectations hit 3.5%, the highest in two decades! The final reading of the UMich Consumer Sentiment Index for the month also fell from 67.8 to 64.7, highlighting market concerns over Trump’s policies. So how should we interpret these developments?

Below, we highlight three key points to address the concerns you may have over Trump’s recent policy moves, and how the accompanying market volatility may present decent opportunities:

1. Trump's Strategy Centers on Deal-Making, and Countries Are Inclined to Show Goodwill

Firstly, despite the extensive nature of Trump’s latest tariff moves, his approach follows a clear strategy of “go broad first, and negotiate later”, and as long as countries are willing to cooperate, the president will likely soften his stance. For instance, Trump initially announced a 25% tariff on all goods from neighboring Canada and Mexico, but the tariffs were postponed after both nations expressed willingness to cooperate on drug enforcement and border security. Similarly, as Trump announced plans for reciprocal tariffs on a global scale, the Indian Prime Minister was on a two-day visit to Washington, which resulted in the two nations’ commitment to negotiate a bilateral trade agreement within the next 6-8 months. Meanwhile, on February 21, the White House issued the “America First Investment Policy” memorandum, emphasizing plans to bolster investment from allies and curbing participation from foreign adversaries such as China. This again underscores that Trump’s policies are not aimed at undermining global markets, but rather prioritizing U.S. interests through negotiations.

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