The shares were recently sold as investors consumed President Trump’s latest tariffs.
Headlines are expected to intensify in the week due to the April 2nd mutual tariff deadline, when Trump was called “liberation day” on Wednesday.
The big question from investors heading towards the expected announcement is the degree to which Trump will impose taxes on trading partners and whether the move will lead to further escalation of the trade war.
“There’s a lot to digest in the market,” Henrietta Treys, director of economic policy at Vedic Partners, told Yahoo Finance. “And they will see how positive and long-term these tariffs are now.
Ajay Rajadhiyaksha, global chairman of Barclays’ research, said in a call with reporters on Thursday that Trump’s recent 25% automobile fares for foreign-made vehicles is “a bigger deal than the market would do.”
“It’s a statement of intent,” Rajadhiyaksha said. “And at least in my mind, it releases the risk that April 2 is something the market cannot dismiss. I think we’ll be negatively surprised.”
The fear of growing markets is that tariffs worse than expected can already bear sour feelings and ultimately pressure them to slow economic growth. The impact of tariffs has already prompted several Wall Street companies to lower their S&P 500 end-of-year targets. The Barclays recently lowered its target from 6,600 to 5,900, the second lowest target on the street.
Read more: What Trump’s tariffs mean for the economy and your wallet
If the final tariff rate is higher than Barclays’ estimate of around 15%, companies believe that potential negative risks of stocks and the economy could plunge into a recession. The possibility of this outcome is that Rajadhyaksha tells his clients to be “as defensive as possible.”
“We’re as defensive as we remember in the last two and a half years,” Rajadhi Yaksha told Yahoo Finance in another interview after a media call on Thursday.
Nearby: March 28th, 4:46:18pm
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Goldman Sachs’ economics team believes the market will be surprised by the downside next week. A recent survey of Goldman Sachs market participants shows investors expect a mutual tariff rate of 9% points. However, the Goldman Sachs team believes the initially proposed rate will be higher, and says that market participants are nearly doubled in the market.
“The administrative authorities explicitly state that the soon-to-be-released tariff rate is intended as a basis for negotiations. This initially encourages the administration to propose higher interest rates,” Phillips wrote when explaining why the team views it as higher than the market expects. “This occurred in recent experience with tariffs in Canada and Mexico. This involved two sudden tariff rates that were mostly or completely withdrawn a few days later.”
The story continues
