FT News Briefing Emerging markets’ surprising performance
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Apr 17, 2025 Federal Reserve chair Jay Powell highlights how U.S. tariffs threaten inflation and employment goals. Meanwhile, UK inflation unexpectedly dips to 2.6%. Emerging markets are showcasing surprising resilience amid market volatility, presenting intriguing investment opportunities. The podcast also discusses the impact of price fluctuations and ongoing challenges within the chip industry, particularly for key players like NVIDIA and ASML, shedding light on the broader implications for the AI sector and stock market dynamics.
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Tariffs and the Fed's Dual Mandate
- Tariffs complicate the Fed's goals of controlling inflation and maximizing employment.
- Higher inflation could force the Fed to raise interest rates, risking job losses.
Emerging Markets' Surprising Performance
- Emerging markets are unexpectedly outperforming U.S. stocks amid market volatility.
- This is surprising given the anticipated negative impact of tariffs on smaller, riskier economies.
Factors Driving Emerging Market Performance
- A weakening dollar is benefiting emerging markets by making it cheaper to service debt and pay for imports.
- Increased stress on U.S. assets, like high-yield credit, is also making emerging markets look relatively better.