Global Risk Indexes (04-02-2025)

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

Graham Westcott

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

U.S. Trade War Expansion, AI Competition, and Energy Market Uncertainty Drive Global Economic Instability

The U.S. trade war is expanding, with new restrictions targeting Europe and Asia. President Trump's administration is reportedly considering new tariffs on European steel and auto exports while increasing pressure on China with additional trade restrictions. This move follows the recent imposition of 25% tariffs on Canada and Mexico, which have already sent shockwaves through global markets. The European Union is preparing retaliatory measures, with potential tariffs on U.S. technology and agricultural exports.

Financial markets are experiencing sharp volatility amid geopolitical uncertainty. The S&P 500 and Nasdaq saw sharp declines as investors brace for further trade disruptions. The euro and Chinese yuan continue to weaken, while the U.S. dollar remains strong, pressuring emerging market currencies. Safe-haven assets such as gold and U.S. Treasuries are in high demand, reflecting rising risk aversion among global investors.

Energy markets face new supply disruptions as OPEC reassesses production strategies. U.S. sanctions on Russian energy exports are tightening, while Canada is warning of potential cuts to crude oil shipments in response to Trump's tariff policies. Meanwhile, the ongoing instability in Libya and Nigeria is adding to supply chain risks. Brent crude is fluctuating around $78 per barrel, with traders anticipating further price swings as geopolitical tensions escalate.

The AI race between the U.S. and China is accelerating. China's DeepSeek AI continues to disrupt global technology markets, challenging the dominance of U.S. firms like Microsoft and OpenAI. Beijing is ramping up its investment in semiconductor manufacturing to reduce reliance on Western technologies. Meanwhile, Washington is considering additional restrictions on AI exports to China, signaling a deepening technological decoupling.

Emerging markets are struggling with capital outflows and inflationary pressures. Brazil, Argentina, and South Africa are seeing increasing capital flight as investors seek stability amid trade war uncertainties. Inflationary risks are rising due to higher import costs, forcing central banks in these countries to maintain tight monetary policies. The Mexican peso and Canadian dollar remain under pressure as North America's trade landscape shifts dramatically.

The Federal Reserve faces mounting pressure to reassess its monetary policy. While inflationary risks from tariffs are increasing, economic slowdowns in trade-sensitive sectors could force the Fed to delay interest rate cuts. The European Central Bank and Bank of England are also facing policy dilemmas, as weak economic growth collides with the need to stabilize inflation.

Strategic priorities for businesses and investors: Companies must adapt to the growing fragmentation of global trade by diversifying supply chains and securing alternative markets. Investors should focus on defensive sectors such as renewable energy, AI, and infrastructure, while being cautious of industries highly exposed to geopolitical risks. The next few months will be critical in shaping global economic policies and trade realignments.

Geopolitical Risk Assessment for the Global Markets
(04-02-2025)

The global economy is entering a period of heightened uncertainty, with trade wars escalating, energy markets facing disruptions, and the AI race intensifying. Short-term risks include inflationary pressures due to U.S. tariffs, volatility in global markets, and supply chain dislocations. Long-term challenges revolve around systemic trade fragmentation, economic decoupling, and technological competition between global powers. Investors and policymakers must prepare for a prolonged period of market turbulence, regional economic realignments, and strategic shifts in trade and energy policies.

Geopolitical Risk Index

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

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