Tariffs Trigger Historic Market Drop

Tariffs Trigger Historic Market Drop

In Donald Trump’s first 100 days back in the White House, the stock market has suffered one of the worst openings to a presidency in nearly a century. The S&P 500 has fallen nearly 8% since January 20, marking the weakest start since Gerald Ford took office in 1974 and the fifth-worst performance since 1928. This period ranks below every other modern presidency except for the early terms of Franklin D. Roosevelt during the Great Depression and Nixon’s second term during stagflation.

Compounding investor anxiety are a falling U.S. dollar and a selloff in Treasury notes, typically considered safe havens. “The U.S. stock market and the dollar have fared worse over the last hundred days than they did during any other presidential term since 1980,” wrote Capital Economics’ John Higgins.

In contrast, under Joe Biden, the S&P 500 jumped over 9% in his first 100 days. The market’s current volatility is fueled in part by Trump’s aggressive economic policies—most notably, sweeping tariffs. In April, Trump proposed a 10% baseline tariff on all imports, slapped higher taxes on goods from over 60 countries, and reignited a trade war with China. The result: a 10% market drop in just two days.

Trump also launched a new federal agency, DOGE, led by Elon Musk, to slash government spending, sparking concern about the ripple effects on private sector contracts. Additionally, the bursting of the AI bubble—after China’s DeepSeek matched OpenAI’s capabilities—has shaken tech valuations across U.S. markets.

Barclays Beats Profit Expectations Again

Barclays reported solid first-quarter results, slightly beating analyst expectations on both revenue and profit. Pre-tax profit rose 11% year-on-year to £2.7 billion ($3.6 billion), ahead of the £2.49 billion forecast, while group revenue hit £7.7 billion, also beating projections. The bank’s investment banking division led the way, with income jumping 16% to £3.87 billion. Return on tangible equity rose to 14%, up from 7.5% in Q4 2023. Shares were up 2% in early London trading.

Barclays’ U.S. exposure remains a key investor concern amid heightened volatility driven by President Trump’s global trade tariffs. The bank, with a strong presence in the U.S. since acquiring Lehman Brothers’ investment arm in 2008, is navigating uncertain conditions. CEO C.S. Venkatakrishnan noted rising market volatility benefits Barclays’ trading business, especially in fixed income, but warned of broader economic uncertainty potentially slowing decision-making and economic activity.

The U.S. consumer division posted a modest 1% income rise to £864 million and improved return on tangible equity to 9.1%, but pre-tax profit slipped 7%. Barclays’ U.K. consumer bank performed strongly, with income up 12% and profit rising 23%, aided by the Tesco Bank acquisition.

RBC analysts said while profit exceeded expectations, rising impairments remain a concern. They noted Barclays’ U.S. exposure could weigh on its stock until global trade tensions ease. Despite turbulence, Barclays’ shares are up over 10% year-to-date, outperforming peers like UBS and Santander, both grappling with deeper restructuring challenges across Europe.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.