{"id":67356,"date":"2025-05-09T13:56:39","date_gmt":"2025-05-09T13:56:39","guid":{"rendered":"https:\/\/dynasty.co.za\/?p=67356"},"modified":"2025-05-16T15:26:18","modified_gmt":"2025-05-16T15:26:18","slug":"the-eye-of-the-storm-news-flash","status":"publish","type":"post","link":"https:\/\/www.dynasty.co.za\/staging\/the-eye-of-the-storm-news-flash\/","title":{"rendered":"The eye of the storm"},"content":{"rendered":"

Equity markets have enjoyed a month of sharp increases, interrupted only by retreats in mid-April. The relief rally has seen indices retrace many of the losses they racked up following US President Donald Trump\u2019s announcement of sweeping new tariffs on \u201cLiberation Day\u201d (which we named \u201cObliteration Day\u201d) on 2 April.<\/p>\n

Last week, the S&P 500 notched up its longest winning streak since 2004. The turnaround in the equity markets is driven by fresh hopes that Trump may be softening his stance on tariffs with trading partners as well as data that suggests that American consumer spending and the job market remain resilient.<\/p>\n

Positive signals from the White House around negotiations with China and a newly unveiled trade deal with the UK helped to keep the momentum going in global equities markets. Markets responded enthusiastically to the UK trade deal, which rolls back tariffs on British steel and autos and promises $5 billion in increased US exports.<\/p>\n

The S&P 500 has made strong gains, recovering 13.75% over the past month, but still lags 3.29% below its 2025 starting point. The Nasdaq composite, likewise, has recovered 17.4% over the past month, helped by upbeat earnings from tech giants like Meta and Microsoft, yet it remains 7.2% lower year-to-date. The Dow Jones Industrial Average has exited correction territory after a string of daily gains, including a 564-point rise last Friday that marked its ninth consecutive advance.<\/p>\n

However, all these gains on US bourses should be seen in the context of a US dollar that remains nearly 7.2% weaker against a basket of developed world currencies than it was at the outset of 2025.<\/p>\n

Global indices are currently outperforming US markets, helped along by the weaker dollar. The MSCI World, our preferred index and a core component of our house-view portfolios, has returned 0.7% year-to-date today, marginally outperforming the S&P 500 with its lower concentration of US-listed equities. Looking at regional returns, when measured in US dollars, the FTSE 100 is up 15.7% over the past month and 10.8% year-to-date, while Europe\u2019s Eurostoxx index has gained 8.51% year-to-date and 14.93% over the past month, boosted by improved economic sentiment and interest rate cuts by the European Central Bank.<\/p>\n

Although the rebound is welcome, markets remain hostage to the whims of the Trump administration. Trump\u2019s heated rhetoric against the Fed raised concerns about political interference in monetary policy in April. Walking back those comments then helped to settle markets.<\/p>\n

Yet this week, Trump renewed his attack on Fed Chairman Jerome Powell. He called Powell a \u201cFOOL who doesn’t have a clue\u201d on social media following the Fed\u2019s decision to hold rates steady. Trump also resurfaced his contention that Powell has a history of moving too late on monetary policy.<\/p>\n

And while the progress on tariffs is welcome, the final details of the UK trade deal have yet to be locked down. It\u2019s also important to note that this deal is considerably worse for both parties than the pre-Trump status quo. A 10% basic tariff on most goods remains in place, which could lead to higher prices and inflation for US consumers.<\/p>\n

Meanwhile, the UK digital service tax, which imposes levies on tech giants like Amazon and Google, will not be changed. Tariffs were reduced and importation rules eased both ways for beef, but British food standards will be maintained. This suggests US companies won\u2019t get much better access to UK markets.<\/p>\n

If this deal is to be a template for the other countries the US is negotiating with, we can expect to see most countries secure more favourable tariff regimes than Trump\u2019s opening bid. At the same time, the renewed deals will most likely be far less advantageous than the trade arrangements that preceded Trump\u2019s return to the White House.<\/p>\n

Despite the recent rally, the gold price has only weakened marginally. The high gold price suggests a symptom of continued weakness in the dollar and lingering fears about global economic stability. Conversely, Bitcoin has broken through the $100,000 mark, a milestone that hints at renewed risk appetite among investors.<\/p>\n

In summary, we believe that it is premature to celebrate the bounce-back in the equities market as a sign of sustained recovery. Investors are no doubt enjoying the relief rally. But with a capricious US President, volatile politics, rising geopolitical tensions, difficult trade negotiations underway, and the Fed under fire, the storm may resume at any moment.<\/p>\n

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\u201cThe first time, I had two things to do \u2013 run the country and survive; I had all these crooked guys. And the second time, I run the country and the world.\u201d\u00a0<\/em><\/p>\n

\u2013 \u00a0US President Donald Trump<\/p>\n

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\u201cThe market is intensely focused on where the tariff rates end up, and it\u2019s bouncing around day-to-day as those assessments change. I don\u2019t think anybody really has a good idea of what\u2019s to come.\u201d<\/em><\/p>\n

\u2013 Jed Ellerbroek, portfolio manager at Argent Capital Management.<\/p>\n

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Global News<\/h2>\n