Global Risk Indexes (21-02-2025)

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

Graham Westcott

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

Global Markets at a Crossroads: Trade Wars, Energy Supply Shocks, and Financial Turbulence Define 2025

The global economy is at a crossroads. The trade war between the U.S. and China is no longer a bilateral dispute—it has morphed into a global economic fracture affecting supply chains, investment flows, and financial markets. Simultaneously, energy markets are undergoing profound realignments as geopolitical tensions in key producing regions disrupt crude supply. Financial markets are struggling to find stability as protectionist trade policies, inflation concerns, and interest rate divergence drive volatility.

Trade War Intensifies: Economic Fragmentation Becomes Permanent

The trade war between the U.S. and China has escalated to an unprecedented level. The U.S. has announced additional 25% tariffs on **automobiles, semiconductors, and medical equipment from China, Japan, and the EU**, escalating tensions with key global suppliers. In retaliation, **China has expanded its own tariffs on U.S. crude oil, LNG, and agricultural exports**, forcing American producers to seek alternative buyers and disrupting global trade flows.

With the U.S. increasingly turning toward trade protectionism, **supply chains are permanently shifting**. American firms are accelerating efforts to move operations away from China, with Mexico, India, and Southeast Asia emerging as alternative manufacturing hubs. However, these realignments come at a cost—short-term disruptions in production, rising input costs, and uncertainty for global corporations reliant on cross-border supply networks.

Energy Markets in Turmoil: Disruptions from Kazakhstan to Libya

Global energy markets are experiencing heightened volatility as supply chain disruptions spread across multiple regions. The ongoing **Ukrainian drone strikes on Russian energy infrastructure** have now cut **Kazakhstan’s oil exports by nearly 40%**, disrupting supplies to China and Europe. Meanwhile, the fragmentation of Libya’s oil sector has intensified, with rival factions independently exporting crude, bypassing state control. The rise of illicit oil sales outside official markets is undermining global sanctions and introducing new layers of unpredictability.

As a result, oil prices are experiencing significant volatility, with Brent crude fluctuating around **$82 per barrel**. The disruption in Kazakh exports alone is enough to tighten global supply chains, adding inflationary pressures at a time when many economies are already struggling with economic slowdown.

Financial Markets Under Pressure: Diverging Central Bank Policies and Investor Flight to Safety

As trade disruptions and inflation concerns mount, global financial markets are experiencing increased instability. The Federal Reserve remains hesitant to cut interest rates due to persistent inflationary pressures, while central banks in **Japan, Australia, and Canada are signaling possible rate reductions** in response to slowing economic growth. This divergence in monetary policy is **fueling currency volatility**, with the **yen and euro fluctuating sharply** against the dollar.

Investors are responding to rising economic uncertainty by flocking to safe-haven assets. **Gold has surged past $3,000 per ounce**, reflecting heightened geopolitical risk and financial market stress. Additionally, **U.S. and European bond markets are showing signs of increasing yield spreads**, indicating growing concern over economic stability in key markets.

Looking Ahead: Economic Uncertainty and the New Reality of Fragmentation

The global economic system is shifting away from the integrated, free-market model that defined the post-Cold War era. We are now witnessing the rise of economic nationalism, supply chain realignments, and financial instability as governments and corporations adapt to a more fragmented world order. **The risks of long-term economic decoupling are increasing, with global markets bracing for sustained volatility and disruption.**

For businesses, policymakers, and investors, navigating this new landscape will require **strategic adaptability, supply chain diversification, and strong risk management frameworks**. The coming months will be defined by continued trade conflicts, resource competition, and uncertainty in global financial markets.

Geopolitical Risk Assessment for the Global Markets
(21-02-2025)

Global markets are facing their most severe turbulence in recent years as deepening trade wars, financial market stress, and energy supply disruptions redefine economic stability. The U.S. and China are locked in an increasingly aggressive trade war, with retaliatory tariffs extending into critical sectors like semiconductors, pharmaceuticals, and automobiles. Energy market disruptions in Kazakhstan, Libya, and the Middle East are compounding inflationary risks, while global investors are scrambling to adjust to volatile currency markets and diverging central bank policies. Financial instability is growing as major economies reassess their economic strategies, with protectionism and economic fragmentation accelerating. The era of seamless globalization has effectively ended, replaced by a period of economic nationalism, resource competition, and financial volatility.

Geopolitical Risk Index

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

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