Global markets stirred by Trump's economic policies
Let's dive into the financial storm sweeping global markets:
The mighty US Dollar has taken a beating this year, with Donald Trump's economic policies stirring up financial chaos worldwide.
Investors are dumping their dollars and shifting focus to Europe as Wall Street struggles to keep up with its European counterparts.
Here's a breakdown of the wild financial ride:
Struggling US Stocks
US stocks have been feeling the heat, with the S&P 500 index only gaining a measly two percent since the start of the year. Meanwhile, Frankfurt's main index has surged an impressive 16 percent, and London and Paris are not far behind with growth at eight and three percent respectively.
According to Kevin Thozet from Carmignac, it's all Trump's fault. The president's erratic tariff policies have created a "nightmare of uncertainty" about their potential impact on growth, Thozet told AFP.
The Falling Dollar
The greenback has plummeted by ten percent against the euro in the past six months, marking its worst performance in three decades, according to analyst Robert Farago at Hargreaves Lansdown. Tariffs and concerns about the gargantuan US debt—exacerbated by Trump's budget proposal—are the primary culprits.
Observers have speculated about the Chinese yuan as a possible dollar alternative, while ECB chief Christine Lagarde has praised the euro, pointing to its potential increased "international role." However, both currencies face daunting challenges, as the yuan is not convertible, and the euro remains fragmented.
Debt Woes
The US debt is at the heart of the global financial system, and countries rely on it as a safe haven for investment. But Jamie Dimon, CEO of JPMorgan Chase, warned in June that the level of US debt was a "ticking time bomb" and that bond markets were heading for a rough ride.
In a sign of mounting concerns, interest rates on 30-year US Treasury bonds climbed above five percent at the end of May. Nobody wants a piece of America anymore, it seems.
"I used to tell clients they needed US debt if they wanted an asset that would survive the apocalypse, but I think that's no longer the case," said Alexandre Hezez, a strategist at Banque Richelieu.
Winners: Gold and Crypto
With investor confidence in the US waning, they're flocking to safe havens like gold and cryptocurrencies. Gold prices have skyrocketed by nearly 30 percent since the start of the year, and Trump's cozy relationship with cryptocurrencies has caused bitcoin to soar past $100,000 for the first time, increasing by almost 60 percent in a year.
Oil Uncertainties
Trump set his sights on bringing down oil prices to quell inflation. Crude oil plummeted below $60 per barrel in April, its lowest price since 2021. But this was short-lived as investor fears of slowing economies sent prices soaring again to around $75 a barrel after military escalations between Israel and Iran.
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Amid the financial turmoil sweeping global markets, investors are increasingly looking to alternative investment options within the business realm. For instance, with the US stocks struggling and the US Dollar plummeting against the euro, some are turning their attention towards European markets.
Concurrently, in light of the erratic tariff policies and mounting debt concerns, gold and cryptocurrencies such as bitcoin have witnessed extraordinary growth, providing a safe haven for those with waning confidence in US financial dynamics.
