Global Risk Indexes (29-01-2025)

Global 97 (+1 ▲)
MENA 95 ( —)
APAC 96 ( —)
Europe 98 ( —)
Africa 98 (+1 ▲)
AMERs 96 (+1 ▲)
Markets 98 (+2 ▲)
Graham Westcott, Global Markets region analyst at Worldwise Analytica

Graham Westcott

Navigating Global Intersections: Where Trade, Finance, Energy and Geopolitics Converge

Tariffs, Energy Tensions, and AI Disruptions: The Global Economy Faces a New Era of Uncertainty

Trump's trade war escalation triggers global market anxiety. The U.S. administration's growing list of tariff threats'targeting Canada, Mexico, China, the EU, and key industries like semiconductors, autos, and metals'is pushing the global economy toward a new period of protectionism. While U.S. financial markets have remained resilient, emerging markets are experiencing increased volatility as investors brace for retaliatory measures. The threat of counter-tariffs on U.S. agricultural and industrial exports could further destabilize global trade flows.

Energy markets struggle with supply disruptions and geopolitical maneuvering. Oil prices dipped slightly, reflecting uncertainty over OPEC production strategies and Trump's push for lower prices to weaken Russia's energy revenues. Saudi Arabia is leveraging its energy dominance through diplomatic engagements, while Libya's oil exports have resumed after protests were resolved. However, ongoing geopolitical tensions in the Middle East and Europe keep supply chain risks elevated, especially as the U.S. continues to enforce Russian energy sanctions.

AI-driven market turmoil highlights the strategic importance of technological dominance. The fallout from DeepSeek's AI launch continues to send shockwaves across global tech markets, with Nvidia clawing back losses after its historic selloff. The Chinese AI model's efficiency raises questions about the future of U.S. semiconductor dominance, while Beijing accelerates efforts to build domestic self-sufficiency in advanced computing. Meanwhile, European and U.S. investors remain divided on whether AI spending will sustain long-term growth, amplifying volatility in tech-heavy indices.

Emerging market dynamics shift as capital flight accelerates. Argentina's decision to cut tariffs on EVs and hybrid vehicles signals an effort to attract foreign investment and stimulate domestic demand. However, broader emerging markets remain vulnerable to U.S. interest rate policies and unpredictable trade measures. Mexico and Canada are particularly exposed to Trump's February 1 tariff decision, with potential repercussions for North American supply chains. Meanwhile, India and China are cautiously recalibrating their economic engagement to mitigate U.S. trade risks.

Europe's economic resilience is tested by weak demand and fiscal constraints. German consumer sentiment has weakened, reinforcing concerns about the eurozone's economic stagnation. The ECB's expected rate cuts contrast with the Fed's more cautious stance, creating divergent monetary policies that could impact currency valuations and capital flows. Meanwhile, Deutsche Bank's failed attempt to expand in China reflects the growing difficulty of Western financial firms operating in Beijing's increasingly complex regulatory environment.

Strategic imperatives for navigating this volatile environment are clear. Investors should focus on resilient sectors such as renewable energy, AI-driven automation, and infrastructure development, while policymakers must prioritize trade diversification and technological independence. The risk of prolonged market instability remains high, making adaptability and geopolitical foresight essential for economic decision-making.

Geopolitical Risk Assessment for the Global Markets
(29-01-2025)

Global markets are facing intensifying trade conflicts, energy realignments, and technological disruptions. The short-term outlook is dominated by the impact of U.S. tariff threats, volatile commodity prices, and the AI-driven shakeup in tech. The long-term risks center around systemic decoupling between major economies, supply chain fragmentation, and the restructuring of global investment flows. Policymakers and investors must prepare for an era of economic nationalism and technological sovereignty, requiring agile strategies to mitigate risks and seize emerging opportunities.

Geopolitical Risk Index

Developments to Follow for the Global Markets (See All Global)

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