The first 100 days of Trump

The belief that US markets are invincible is about to be seriously stress-tested

- AKASH PRAKASH

The media is full of reports and articles analysing the Donald Trump administration as it completed 100 days in office. The levels of volatility and daily market-moving posts on social media have been unprecedented. Mr Trump has signed the highest number of executive orders in the first 100 days of any US administration in history. If one were to take a step back and look at the first 100 days of Trump 2.0, some broad trends become clear.

The biggest theme has undoubtedly been the unveiling of new thinking towards trade and tariffs. We have moved to the highest tariffs in the US since the late 1930s. Even assuming we end up with a 10 per cent general tariff on everyone and somewhere near 60 per cent on China, along with some sector-specific rates and exemptions, the ratio of duties collected to total trade will be about 15 per cent, compared to 2.5 per cent in the pre-Trump era. This will fundamentally alter trade and force supply chain reorganisation.

As for the markets in the first 100 days, the breakout performance has been in gold. It has hit all-time highs and is up more than 20 per cent. European equities are the next best, with the German market gaining more than 15 per cent in dollar terms, followed by the Hang Seng in Hong Kong and the broad Euro Stoxx 600, both rising by 10 per cent. The worst performers are oil, down almost 20 per cent, and the Magnificent Seven (Mag7), down 15 per cent, followed by the Nasdaq at minus 10 per cent.

The other standout has been the US dollar. This has been the worst 100-day dollar performance following an inauguration since daily data became available in 1969. In terms of the economy, we have seen a tanking of both consumer and corporate confidence, and almost every forward-looking indicator of the US economy is worsening rapidly. The current hard data on employment and orders is still strong, but the prediction markets now have the odds of a US recession in 2025 at more than 60 per cent.