Global Markets Bracing for Volatility Ahead of US Reciprocal Tariffs
Apr 1, 2025
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In this discussion, Brad Bernstein, Managing Director at UBS Private Wealth Management, and Ethan Devitt, Chief Global Market Strategist at Moneta Group Investment Advisors, analyze the upcoming U.S. reciprocal tariffs and their potential to spark market volatility. They dive into the effects on emerging markets, particularly in Asia, stressing the importance of diversified portfolios in uncertain times. Insights include navigating recent financial trends and anticipating a cautious but optimistic outlook for the U.S. economy amid tariff implications.
The recent U.S. reciprocal tariffs have heightened market volatility, causing investors to reconsider their strategies and seek defensive sectors.
Despite market uncertainties, there is cautious optimism for U.S. markets outperforming global counterparts, highlighting potential opportunities in smaller and mid-cap stocks.
Deep dives
Market Volatility and Tariff Impacts
Global equities are currently facing heightened volatility, primarily driven by uncertainty surrounding U.S. reciprocal tariffs. The S&P 500 recently experienced its worst quarterly performance compared to international markets since 2009, prompting concerns among investors. Analysts suggest that the market's ability to rally after hitting session lows indicates a potential for buying opportunities, particularly ahead of key tariff announcements. There is speculation that positive movements may follow these announcements, despite the inherent risks associated with tariff policies.
Sector Preferences Amid Economic Uncertainty
In the current financial climate, there is a noticeable shift towards defensive sectors, with consumer staples showing resilience despite overall market downturns. Analysts recommend diversifying portfolios, particularly focusing on sectors like healthcare that are expected to thrive as longevity narratives become more prominent. The sentiment is cautiously optimistic regarding U.S. markets outperforming global counterparts in the second half of the year, although there are reservations about exposure to sectors such as commodities that have recently surged. This cautious optimism reflects a belief that despite uncertainties, opportunities still exist for strategic investments.
Global Diversification and Consumer Sentiment
Investment strategies are increasingly reinforcing global diversification, particularly in non-U.S. equities, as analysts advocate for maintaining a balanced approach amidst market unpredictability. There is growing concern regarding U.S. consumer sentiment, which has dipped to levels not seen in over a decade, with implications for consumption and equity markets overall. Smaller and mid-cap stocks are highlighted as areas of potential growth, insulated from some external pressures like global trade uncertainties. As investors weigh risks, opportunities in markets like Europe are being considered, offsetting caution towards emerging markets.
On today's episode, a discussion on how the latest bouts of market volatility ahead of new reciprocal tariffs from the Trump White House may be giving investors pause. We speak with Brad Bernstein, Managing Director at UBS Private Wealth Management.
Plus - how the rollout of those tariffs later this week may drive emerging-market volatility, and why Asian markets may be at risk given the large trade imbalance with the United States. We hear from Aoifinn Devitt, Chief Global Market Strategist at Moneta Group Investment Advisors.