Market uncertainty due to ongoing trade wars and Trump's tariffs announcement impacting stock valuations

From Morningstar: 2025-04-07 10:28:00

The stock market remains uncertain despite expectations of clarity after Trump’s ‘Liberation Day.’ Portfolios are suffering historic damage due to ongoing trade wars. The global economy could face long-lasting disruption similar to the aftermath of the 2008 financial crisis.

Markets dislike uncertainty, affecting stock valuations. Investors struggle to assign values to investments amid unclear future outlook. Uncertainty leads to lower prices as investors demand discounts on future returns.

Trump’s tariffs announcement throws global trade networks into disarray. Uncertainty around the duration and level of tariffs disrupts businesses and consumer costs. The impact of tariffs on the economy remains uncertain, affecting various sectors.

The market faces ‘unknown unknowns’ similar to the aftermath of the 2008 financial crisis and the pandemic. The decline in the US dollar value indicates potential global capital flow shifts. A weaker dollar could lead to higher interest rates and inflation, impacting the economy.

Uncertainty in the market prevails as long as tariffs remain in place. The potential for significant economic repercussions exists if tariffs are not rescinded promptly. The current situation poses challenges for investors, businesses, and the economy at large.



Read more at Morningstar: This Is What Real Market Uncertainty Looks Like