On February 7, U.S. President Donald Trump's rapidly changing tariff decisions have significantly increased market volatility and investor uncertainty, with little relief expected in the upcoming days.
There is a potential for another unexpected move by Trump, ranging from tariffs to geopolitics, amongst other scheduled events such as U.S. inflation data. Investors are particularly focused on one market that has shown its strongest performance in a decade compared to Wall Street.
Market sentiment improved when Trump decided to hold off on tariffs for Mexico and Canada just hours before their implementation. However, investors are uncertain whether this tariff rhetoric is a negotiation tactic or could escalate global tensions and economic conflicts involving the U.S.
Steven Bell, the Chief EMEA Economist at Columbia Threadneedle, cautioned that even if Trump negotiates away some tariffs, he may reintroduce them later, possibly leading to a disruptive trade war.
The potential rise of global rivalries, especially from China, Brazil, Russia, and Iran, to reduce reliance on the U.S. dollar for trade could challenge the current world economic order.
Moving forward, investors are awaiting the release of the U.S. consumer price index to gauge the impact of Trump's tariff threats on inflation risks.
In the ongoing Sino-U.S. trade dispute, investors anticipate a prolonged standoff between the world's largest economies, with all eyes on a potential meeting between the U.S. and Chinese presidents to ease tensions.
Meanwhile, European markets are attracting investors due to favorable conditions like inexpensive valuations, earnings growth, and positive momentum.
Despite Europe's strong outlook for 2025, uncertainties persist, including potential impacts from tariffs, the possibility of Germany relaxing fiscal policies, and a potential easing of Ukraine tensions.
The upcoming Ecuadorian elections are anticipated to be crucial, with the main focus on President's main contender, . Opinion polls suggest that banana-business heir Noboa could win outright, but a runoff vote may be needed. The key electoral issues include addressing violence and preventing another debt crisis following power outages last year.
Noboa is seen as the preferred candidate for continuity by the market; however, his candidacy is complex due to public disputes with Vice President Veronica Abad and recent conflicts with Mexico.