Global Risk Indexes (14-02-2025)

Global 97 (0 —)
MENA 98 ( —)
APAC 96 (+1 ▲)
Europe 97 ( —)
Africa 97 ( —)
AMERs 98 ( —)
Markets 96 (-2 ▼)
Graham Westcott, Global Markets region analyst at Worldwise Analytica

Graham Westcott

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

Global Trade War Deepens: Market Volatility Rises Amid U.S. Tariffs, Energy Disruptions, and Currency Shifts

The global economy is moving toward a critical inflection point, as deepening trade war tensions, energy market instability, and financial market fluctuations create significant risks. The economic consequences of U.S. tariffs, Chinese export pressures, and shifting energy flows are beginning to materialize, with repercussions spanning equities, commodities, and foreign exchange markets.

Trade War Fallout: Rising Deflation Risks and Supply Chain Chaos

The U.S.-China trade conflict has entered a new and more dangerous phase. Trump's \reciprocal tariff\ strategy is already triggering retaliatory trade measures, while Chinese exporters are engaging in a global price war, flooding markets in Asia, Latin America, and Africa. The consequence is twofold: profit margins are collapsing for Chinese manufacturers, while import-dependent nations may soon impose their own protective tariffs. This will fuel an accelerating feedback loop of deglobalization and supply chain fragmentation.

For the U.S., the short-term impact has been a slightly weaker dollar, as markets brace for tariff retaliation from major trading partners, including Canada, Mexico, and Brazil. In contrast, the euro and pound have gained strength, supported by expectations that Trump's trade policies may backfire on U.S. growth.

Energy Market Upheaval: U.S. Sanctions Reshape Global Oil Flows

U.S. sanctions on Russian oil are disrupting energy trade flows, forcing refiners in China and India to turn to the Middle East, Africa, and even Latin America for crude supplies. While this has temporarily lifted Brent and WTI oil prices, it has also increased cost pressures for refiners. Russia, meanwhile, is under growing financial strain'lower oil revenues and a stagnating economy are forcing Moscow to dip into its dwindling sovereign wealth fund.

Meanwhile, Brazil's ethanol dispute with the U.S. signals further trade fragmentation in global energy markets. Brazil is resisting Washington's push for reciprocal tariffs, which could disrupt biofuel exports and increase costs in the U.S. ethanol supply chain.

Financial Markets: Gold Surges, Investors Seek Safe Havens

As trade tensions intensify, investors are shifting capital into safe-haven assets. Gold prices have rallied as Canadian investors hedge against U.S. tariff risks, and uranium stocks are also seeing a surge in demand amid concerns over U.S. energy security. In Europe, markets are betting that Germany may finally loosen its fiscal restraints, though industrial production remains weak, signaling persistent structural challenges.

Meanwhile, in the technology sector, Arm Holdings is shifting into direct chip production, challenging major players like Qualcomm and Nvidia. This could disrupt long-standing industry dynamics, particularly as geopolitical pressures force nations to rethink semiconductor supply chains.

Currency Shifts: The Euro and Yen Gain Ground

Currency markets are responding to shifting global trade and economic expectations. The euro has strengthened on optimism over potential Ukraine-Russia peace talks, while the yen is rising as investors expect the Bank of Japan to tighten monetary policy.

Conversely, the U.S. dollar is showing signs of weakness, as markets assess the long-term impact of Trump's tariff policies on economic growth and inflation. If the Federal Reserve delays rate cuts, the dollar could regain strength, but trade policy remains a wild card.

Looking Ahead: Economic Fragmentation Accelerates

Global markets are entering a new phase of uncertainty, as trade war escalations, energy realignments, and currency shifts redefine economic relationships. The risk of financial market volatility remains high, particularly as corporate profit margins contract, commodity markets fluctuate, and interest rate policies diverge worldwide.

Investors and businesses should prepare for greater economic fragmentation, with supply chains realigning and national policies shifting toward protectionism and industrial self-sufficiency. Short-term market shocks are likely, but the long-term impact will be a restructuring of global trade, investment, and financial flows.

Geopolitical Risk Assessment for the Global Markets
(14-02-2025)

Global markets are under mounting stress as trade war escalations, geopolitical instability, and shifting financial conditions converge. The U.S.-China trade war is deepening, disrupting supply chains and triggering deflationary pressures. Energy markets are volatile, with U.S. sanctions forcing China and India to diversify oil sources. Currency fluctuations and divergent central bank policies are heightening uncertainty. Short-term market risks remain high, with increased volatility across commodities, equities, and currency markets. Long-term, economic fragmentation and supply chain realignments will reshape global trade and investment flows.

Geopolitical Risk Index

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

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