Global Risk Indexes (30-01-2025)

Global 97 (0 —)
MENA 95 ( —)
APAC 97 (+1 ▲)
Europe 98 ( —)
Africa 98 ( —)
AMERs 97 (+1 ▲)
Markets 97 (-1 ▼)
Graham Westcott, Global Markets region analyst at Worldwise Analytica

Graham Westcott

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

Trade Tensions, Energy Realignments, and AI Disruptions Reshape the Global Economy

U.S. trade policies fuel market anxiety as tariff deadlines loom. President Trump's administration remains firm on imposing 25% tariffs on Canada and Mexico by February 1, alongside broader levies on China and Europe. While these tariffs are designed to pressure trade partners into concessions, they also threaten global supply chains, particularly in the automotive, semiconductor, and energy sectors. Mexico and Canada remain exposed to potential economic fallout, with the peso and Canadian dollar facing downward pressure.

Energy markets face volatility as U.S. pressures OPEC. Trump's calls for Saudi Arabia and OPEC to lower oil prices in an effort to weaken Russia's revenues have added another layer of instability to global energy markets. Brent crude remains subdued at $76.50 per barrel, but underlying supply risks persist as OPEC nations weigh production cuts. Meanwhile, Russian oil exports are facing increased scrutiny due to new U.S. sanctions, further tightening global supply chains. Saudi Arabia's $1 trillion investment pledge to the U.S. underscores its strategic effort to maintain influence while diversifying economic alliances.

China's AI breakthrough rattles global tech markets. The continued rise of DeepSeek's AI model has sent shockwaves through U.S. and European tech markets, with investors reassessing the long-term competitive landscape. Microsoft and Meta's aggressive spending on AI infrastructure reflects the growing urgency for Western tech firms to maintain their lead. However, China's ability to produce high-performing AI models at a fraction of the cost is accelerating concerns over technological decoupling and the fragmentation of global innovation ecosystems.

Emerging markets face renewed challenges from capital flight and inflationary risks. Brazil's central bank raised interest rates to 13.25%, signaling a hawkish stance in response to persistent inflation and currency depreciation. The Brazilian real remains under pressure, and policymakers are struggling to anchor inflation expectations. Meanwhile, Argentina's tariff reductions on EVs and hybrid vehicles aim to attract foreign investment, but broader economic uncertainty remains. Capital outflows from emerging markets continue as investors seek safer assets amidst rising geopolitical risks.

Europe grapples with economic stagnation and trade risks. The European Commission's push for additional sanctions on Russian aluminum and expanded restrictions on video game consoles underscores its commitment to economic pressure on Moscow. However, the EU's auto sector remains under stress due to weak EV demand and the looming threat of U.S. tariffs. German consumer confidence has weakened, reinforcing concerns about prolonged stagnation in the eurozone. Meanwhile, ECB rate cuts appear inevitable as policymakers attempt to stimulate growth while managing external trade threats.

Strategic priorities for navigating this uncertain environment are clear. Policymakers must focus on trade realignments, energy security, and supply chain diversification to mitigate systemic risks. Investors should prioritize resilient sectors such as AI, renewable energy, and infrastructure, while remaining cautious about industries exposed to protectionist policies. 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
(30-01-2025)

Global markets are navigating an increasingly volatile landscape, shaped by intensifying trade protectionism, energy realignments, and disruptions in the technology sector. Short-term risks are being driven by inflationary pressures from supply chain constraints, U.S. tariff threats, and geopolitical instability in energy markets. Long-term risks include systemic economic decoupling, deglobalization trends, and shifting investment flows in critical industries. Policymakers and investors must adapt to an era of economic nationalism, requiring strategic trade realignments and a focus on supply chain resilience.

Geopolitical Risk Index

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

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