Trump’s tariffs unsettle investors

The US was the focus of markets this week. The Fed hiked its target rate by 25bp on Wednesday to 1.50%-1.75% but this had been widely anticipated and there was little reaction in commodity markets. In contrast, President Trump’s announcement of a 25% tariff on $50bn worth of China’s exports to the US weighed on investor sentiment. US equities slumped and most industrial metals fell on concerns about lower levels of global trade and demand. Oil still managed to buck the otherwise negative trend, with prices surging on the back of the risk that the US will reimpose sanctions on Iran. Turning to next week, any signs of retaliatory action by China could fuel further investor outflows from riskier assets. There is little in the way of market-moving data for commodities, at least until the Easter weekend when China will publish its March PMI readings.