By VK Sharma
Just when the global markets were coming to terms with Trump’s disruptive trade policies, the US President announced his paln to impose reciprocal tariffs on countries, instead of a blanket tariff. This has further muddied the trade waters and increased volatility in markets.
The Dow Jones Industrial Average, S&P 500 and the Nasdaq closed the week down by 0.5%, 0.2% and 0.5%, respectively.
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Trump is skating on thin ice here as one can’t predict what will be the outcome of these yet-to-be-announced trade tariffs. Countries impacted could announce retaliatory measures, either by design or by sheer miscalculation, leading to the possibility of a trade war. China, for instance, has slapped similar duties on US imports.
However, sanity would prevail in the longer run as countries are proactively taking steps to reduce duties on imports from the US.
The EU has said it is prepared to cut its 10% import tax on cars to get closer to the 2.5% levy charged by the US. India, too, has lowered tariffs on some imports from the US in the Budget.
Our reactions to the US action will be measured and carefully crafted, rather than as a knee jerk reaction, but we will defend our turf where we must.
In the US, the January non-farm payrolls rose by 143,000, which was less than what economists had pencilled in, and which were way lower than the revised numbers for December at 307,000. However, month-on-month wage growth of 0.5% was hotter than the expected 0.3% growth. The next meeting of the FOMC is on March 18-19, which will give the wise men of the Fed to also take into consideration the February non-farm payroll data that will come on March 7. If the weak job trend holds, the FOMC may revisit its hawkish stance.
Coming to our markets, despite falling for three consecutive sessions, the Nifty gained 0.33% last week. A week before, in the extended one ended on the Budget day, the Nifty had gained 1.69%. More importantly, it had completely engulfed the trading of the week ended January 24, which is bullish.
FPIs’ incessant selling continues; withdraw Rs 7,300 crore from equities in a week
Have a look at the trendline number 42,
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