30 AM.. This represents a decline of 0.5 percent from Thursday’s closing level.
Market sentiment appears to be shifting, with the initial optimism from earlier in the week, which saw the DAX reach a record high, now tempered by concerns regarding potential trade disruptions. Jochen Stanzl, Chief Market Analyst at CMC Markets, attributed the downturn to anxieties surrounding escalating tariffs.
“The optimism from the first half of the week, marked by a new DAX record, is giving way to fears of a negative tariff surprise as the weekend approaches” Stanzl stated. He highlighted the recent trade negotiations between Canada and the US, noting that Canada is now compelled to accept increased tariffs. Stanzl cautioned that Europe may face a similar fate.
The analyst explained that the US President seems to be pushing for Canadian companies to relocate production to the United States as a method of circumventing these tariffs. The perceived futility of the negotiations, combined with the President’s statements justifying the tariffs beyond the initially cited reason of fentanyl smuggling – suggesting a broader range of potential justifications – has generated unease.
Drawing parallels to the tariffs imposed on Brazil, Stanzl emphasized that US justifications for trade measures are increasingly based on internal political alignments that diverge from US policy. There is a concern that future trade negotiations could be merely pretexts for the imposition of substantial tariffs, potentially blaming countries for failing to negotiate effectively.
“The trend is now escalating, with the previously almost-accepted 10 percent tariffs potentially rising to 15 or even 20 percent – an unexpected development” he added. He anticipates that US trade practices will continue to cause volatility in the markets and that investor caution is likely to remain. Market participants are also bracing for a potential letter from Washington to Brussels over the weekend. This anticipation is prompting reluctance to take on new positions heading into the close of the week, to avoid potential gaps in the market when trading resumes on Monday.
The euro also weakened slightly on Friday morning, trading at $1.1693, with the dollar fetching €0.8552.
