Global markets mixed as Trump’s tariffs unsettle trade partners

ISTANBUL

Global markets displayed mixed performance on Wednesday as President-elect Donald Trump’s protectionist policies, particularly tariff threats, raised concerns among major US trade partners. Meanwhile, the Biden administration’s potential new regulations on Chinese semiconductors dampened investor sentiment.

Market participants are wary that Trump’s tariffs could complicate the Federal Reserve's efforts to combat inflation, particularly as US-China tensions remain unresolved.

US economic data showed a 2.8% growth in the third quarter, driven by consumer spending, while October consumption increased by 0.4% month-on-month. Analysts believe these figures could prompt the Fed to maintain a cautious approach, possibly extending its rate-cut cycle beyond December.

S&P Global Ratings forecasted the global economy to grow by 3.3% in 2024 and 3% in 2025, with the US economy projected to expand by 2.7% in 2024 and 2% in 2025.

Meanwhile, gold prices hovered between $2,630 and $2,640 per ounce, while Brent crude oil stood at $72 per barrel. The yield on US 10-year Treasury bonds fell 6 basis points to 4.26%. Bitcoin also rebounded, trading at $95,300 after dipping to $91,100 earlier this week.

On Wall Street, the S&P 500 fell 0.38%, the Nasdaq 0.6%, and the Dow Jones 0.31% on Wednesday.

European markets under pressure

European stock markets faced selling pressure as Trump’s tariff threats weighed on investor confidence. European Central Bank (ECB) President Christine Lagarde urged EU leaders to negotiate with Washington, warning that a trade war could severely harm global economic growth.

Trump has proposed a 20% general tariff on all non-Chinese imports, prompting Lagarde to call for diplomacy over retaliation.

Adding to regional uncertainties, France’s government is on the brink of collapse after failing to agree on its 2025 budget.

Russia also faced economic challenges, with the ruble losing 12% of its value in the last 10 days due to US sanctions on Gazprombank. The Russian central bank announced it would halt foreign currency purchases for the rest of the year to stabilize the ruble, while Gazprom’s shares plummeted to $1.

On Wednesday, the DAX 40 fell 0.3%, the CAC 40 lost 1.1%, the FTSE MIB 30 dropped 0.7%, and the FTSE 100 ended flat. Futures trading on Thursday started with mixed signals across European indices.

Asia shows resilience

Asian markets showed a positive trend on Wednesday, apart from Hong Kong. South Korea’s central bank surprised markets by cutting its policy rate by 25 basis points to 3%, citing uncertainty after Trump’s election victory.

Japan’s government is set to approve an additional $92 billion for its stimulus package, while Trump’s lower-than-expected tariffs on China boosted semiconductor stocks. Tokyo Electron shares surged nearly 10%, while Kokusai Electric Corporation gained 23%.

S&P Global projected China’s economy to grow 4.8% in 2024 and 4.1% in 2025.

Near the close on Wednesday, Japan’s Nikkei 225 rose 0.9%, South Korea’s Kospi gained 0.2%, and the Shanghai Composite Index inched up 0.1%. However, Hong Kong’s Hang Seng Index dropped 1.2%.

Türkiye remains steady

Türkiye’s BIST 100 index remained mostly flat on Wednesday, edging up 0.04% to close at 9,639.77.

The US dollar/Turkish lira exchange rate ended Wednesday at 34.6390 and traded slightly higher at 34.6480 on Thursday.

*Writing by Emir Yildirim