Latest news with #KevinThozet
France 24
a day ago
- Business
- France 24
How Trumponomics has shaken global markets
Many investors are pulling money out of the United States, the mighty dollar has lost its lustre and Wall Street is being outpaced by European stock markets. Here is a look at the financial roller-coaster ride. US stocks under pressure After years of global dominance, US stocks are feeling the heat -- and Europe is the main beneficiary. Wall Street's S&P 500 index has gained just two percent since the start of the year, compared with 16 percent for Frankfurt's main index. Growth at the exchanges in London (eight percent) and Paris (three percent) is also outstripping Wall Street. Kevin Thozet from the investment firm Carmignac pinned the blame firmly on Trump. The president's flip-flopping on tariffs had created a "high level of uncertainty" about their potential impact on growth, Thozet told AFP. Dollar slides The dollar has lost 10 percent of its value against the euro in the past six months, "its worst performance in 30 years", according to Robert Farago, an analyst at the British investment firm Hargreaves Lansdown. Trump's tariffs are the main culprit but the global reserve currency is also suffering from concerns about the size of the US debt -- exacerbated by a budget proposal from the president that many analysts say will be hugely expensive. While some have suggested the Chinese yuan could become a dollar alternative, ECB chief Christine Lagarde has touted the euro, discussing in May its potentially greater "international role". But any currency attempting to topple the dollar faces plenty of challenges. "The yuan is not convertible, and the euro is too fragmented," said Jean Lemierre, chairman of the board of directors of BNP Paribas. Debt worries American debt is a cornerstone of the financial system, as the rest of the world lends to the United States in search of a safe investment. But Jamie Dimon, head of JPMorgan Chase, said in early June that the level of US debt was a "real problem" and that bond markets were facing a "tough time". In a sign of the loss of confidence, interest rates on 30-year US Treasury bonds surpassed the symbolic five percent mark at the end of May. "I've always told clients they need US debt if they want an asset that remains intact even in a disaster, but I think that's no longer the case," said Alexandre Hezez, a strategist at Banque Richelieu. Steve Sosnick, chief strategist at US-based Interactive Brokers, told AFP the fact the dollar was falling while rates were rising was "a sign there's money moving out of the US". Winners: gold, crypto Investors have long regarded gold as the ultimate safe harbour in a crisis, and the clamour for the metal has seen its value jump by almost 30 percent since the start of the year. Major central banks have also had a hand in pushing up the price, as they look to gold as a more sure bet than dollars to hold in their reserves. Meanwhile, Trump has leant heavily into cryptocurrencies with investments of his own and official measures to bring the assets into the mainstream. Bitcoin passed $100,000 for the first time just after the US election, increasing almost 60 percent in a year. Oil uncertainties Trump made it a priority to bring down oil prices so that US inflation would come down. Crude oil fell below $60 per barrel in April, its lowest price since 2021. But that was because investors spooked by Trump's tariffs were anticipating weaker demand worldwide if economies slowed. The military escalation between Israel and Iran has seen prices climb again to around $75 a barrel.
Reuters
07-04-2025
- Business
- Reuters
Global markets are in meltdown: here's how it looks in charts
LONDON, April 7 (Reuters) - A stock market rout, historic in scale, has swept across the globe wiping more than $10 trillion off major markets, as concerns about the economic damage unleashed by U.S. President Donald Trump's tariffs spiral. No corner of the world has been left unscathed by selling, with moves of a magnitude last seen during the 2020 COVID-19 crisis. Here's how the selloff looks in charts. WALL STREET MELTDOWN The S&P 500 stock index (.SPX), opens new tab fell over 10% in the last two trading sessions of last week, its worst performance since the end of the Second World War and rivaled by the 1987 stock market rout, the 2008 global financial crisis and the 2020 COVID shock. The benchmark whipsawed on Monday, falling as much as 4.8% before bouncing as much as 4%. It was last down 1.33% as of 1700 GMT. Kevin Thozet, investment committee member at Carmignac, said he expected U.S. stocks to keep falling and the cost of borrowing for companies to keep rising. The hit to U.S. household wealth from the severe stock-market losses would impact consumer spending and economic growth. U.S. households are heavily invested in equities and their combined wealth hit a record high at the end of 2024 after two years of dazzling stock market gains. "There's been a kind of toxic wedding between U.S. economic growth and U.S. equity markets because (cash) savings rates were so low." VOLATILITY HIGH Wall Street's fear gauge, the VIX index, is now trading at its highest since last August's selloff in global stocks. The VIX index closed above 45 on Friday for the first time since the 2020 COVID crisis, also the biggest single-day jump since then. In Europe, a similar indicator -- the Euro STOXX Volatility Index (.V2TX), opens new tab -- was set for its biggest one-day surge in absolute terms since October 2008. BANKS Banking stocks globally have borne the brunt of the selling - with European and Japanese banking stocks having shed roughly 20% each over the last three trading sessions. In Europe, banking stocks - that had been riding high on optimism about brighter longer-term growth prospects following news last month of Germany's huge fiscal boost - have lost 15% in three days, their largest such drop since COVID. Recession fears are boosting expectations for faster interest rate cuts from big central banks -- a backdrop that typically bodes ill for banks. CRUDE DECLINE Another area that is feeling the pain of the coming weakening in demand from a global growth hit is oil. Brent crude was last down 2%, having hit its lowest since April 2021. Over three sessions, oil has lost almost 15% -- the biggest three-day drop since the COVID crisis. DOWN, DOWN UNDER The Australian dollar has been a major casualty . Australian exports to the United States will be subject to the lighter 10% rate, compared with China's hefty 34%, based on the list Trump unveiled last week. But traders often use the Aussie dollar as a proxy for the less-liquid Chinese yuan, given Australia's exposure to the Chinese economy. Since Trump unveiled his tariffs and China's tit-for-tat response, the Aussie has lost nearly 4% in value. It has dropped 4.5% in the last two days alone, marking its largest two-day fall since a 6% drop in 2020, in turn, the largest since 2010. DONG TAKES A HIT Markets in Vietnam, one of the major engines of "Factory Asia" and a huge exporter of goods to the United States - are reeling. Trump has slapped a duty of 46% on imports from Vietnam. Its trade surplus with the United States rose by an annual 20% in 2024 to a record above $123 billion, exporting anything from coffee to sporting apparel. Domestic stocks and the dong currency have dropped accordingly. The dong has hit an all-time low and is around 5% below last September's seven-month peak. A weak currency does have the effect of making Vietnam's exports even cheaper than they otherwise would have been. Yet it may not be enough to offset the damage of hefty U.S. tariffs. NEW FRONTIER The sovereign bonds of several so-called frontier markets have suffered selling. Bonds issued by Pakistan, which exports textiles to the United States, dropped 13 cents before retracing, pushing some of its debt to or below 70 cents on the dollar, a level below which a borrower is considered to be distressed. Sri Lanka's recently restructured bonds also faced steep losses as the exporter is hit by tariffs, as did oil exporters such as Angola. The hammering poses serious questions for the borrowing costs and economic outlook of some of the countries; Sri Lanka had been clawing its way back from the worst economic crisis in a generation, and Pakistan and Angola have struggled with high debt burdens in recent years. For more insights like these, click here, opens new tab to try Breakingviews for free.
