Global Risk Indexes (02-02-2025)

Global 98 (0 —)
MENA 96 ( —)
APAC 97 ( —)
Europe 99 ( —)
Africa 98 (+1 ▲)
AMERs 98 (+1 ▲)
Markets 99 ( —)
Graham Westcott, Global Markets region analyst at Worldwise Analytica

Graham Westcott

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

Trade Wars, AI Competition, and Energy Realignments: A Global Economy in Transition

The U.S. tariff escalation is accelerating global economic fragmentation. President Trump's imposition of 25% tariffs on imports from Canada and Mexico, along with additional duties on China, has reshaped trade flows overnight. North American integration is now under threat, with Canada and Mexico exploring retaliatory measures that could disrupt key industries such as automotive, agriculture, and energy. The tariffs have already weakened the Mexican peso and Canadian dollar, raising inflationary concerns in the region.

China's AI-driven industrial shift is challenging Western dominance. The rise of DeepSeek AI has sparked concerns among Western tech firms, with U.S. semiconductor and AI companies forced to accelerate investments to maintain their competitive edge. Microsoft, Nvidia, and Meta have announced aggressive expansion plans, but China's ability to develop cost-efficient AI models is intensifying fears of a widening technological decoupling. Meanwhile, regulatory scrutiny on AI firms in Europe and South Korea is adding another layer of complexity to the global AI race.

Energy markets are in flux as geopolitical tensions mount. Trump's threat to impose tariffs on Canadian oil and natural gas has sent shockwaves through energy markets, with Brent crude hovering around $77 per barrel amid uncertainty over supply disruptions. OPEC members, led by Saudi Arabia and Russia, are reassessing their production strategies in response to shifting U.S. policies. Meanwhile, Libya's efforts to ramp up production face internal political challenges, further complicating global supply dynamics.

Europe's economic stagnation contrasts with U.S. resilience. The eurozone remains in a precarious position, with Germany and France struggling to generate growth. The ECB's latest rate cut reflects deepening concerns over inflation and weak consumer demand. Meanwhile, U.S. labor markets remain strong, giving the Federal Reserve more room to delay interest rate reductions. The divergence in monetary policy between the ECB and the Fed is creating volatility in currency markets, with the euro weakening further against the dollar.

Emerging markets are caught in the crossfire of global trade and capital flows. Argentina and Brazil continue to experience capital outflows as investors seek safer assets amid rising trade uncertainty. Meanwhile, Peru and Africa's largest copper producers, the DRC and Zambia, are pushing for greater control over mineral resources to capitalize on rising demand from the AI and EV industries. These structural shifts indicate that emerging markets are increasingly asserting themselves in global trade negotiations.

Strategic imperatives for investors and policymakers. Businesses must reassess supply chain dependencies and prioritize regional trade diversification. Investors should focus on defensive sectors, including AI, renewable energy, and industrial automation, while remaining cautious about industries exposed to trade volatility. The coming months will be crucial in determining the trajectory of trade realignments, technological leadership, and global energy stability.

Geopolitical Risk Assessment for the Global Markets
(02-02-2025)

The global economy is undergoing a period of systemic transformation, driven by escalating trade wars, technological decoupling, and energy realignments. The U.S. tariff escalation has triggered severe disruptions in global supply chains, particularly in North America, while China's AI-driven advancements are fueling geopolitical competition in the tech sector. Energy markets remain fragile amid shifting alliances and geopolitical uncertainties. Investors and policymakers must prepare for sustained volatility and deglobalization trends, requiring a strategic focus on supply chain resilience, trade diversification, and industrial self-sufficiency.

Geopolitical Risk Index

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

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