This has been particularly evident in the metals market. Grain prices in the US are also suffering due to reduced demand from Mexico and Canada. The oil market is drifting lower due to fears that a global trade war could reduce demand. Gold continues to shine, rising in anticipation of ongoing global discontent. Investors are seeking protection as the exceptionalism in the US stock market fades rapidly, and other regional markets struggle.
Did the oil market anticipate OPEC’s decision to return volumes in April?
Perhaps not, but I don’t believe the impact will be as severe as some fear. We’re looking at an increase of 2.2 million barrels over an extended period. We might also see a short-term slowdown in production in Venezuela and Iran due to sanctions, offsetting the increase from other producers. Additionally, the reality that we are not returning to $90 oil prices anytime soon, means that the high prices that enabled growth in non-OPEC production are no more. WTI is trading in the mid-$60s, and if it falls below $65, it could hasten market normalization, with OPEC taking back market share.
How is Europe coping with the US approach to Ukraine and tariffs?
There’s a sense that this could lead to making Europe stronger. Germany has already slashed borrowing limits, which were previously holding Europe back. We might see increased spending, particularly on defense and infrastructure. Europe is realizing that it cannot depend solely on the US, given its volatile governance. I’m optimistic about Europe’s prospects. We’ve already seen a significant jump in the stock market and German bond yields.
What cards does China have to play with US tariffs?
China's control over rare earth minerals in different geographies is a significant bargaining tool. Trump has been seeking alternative sources globally, indicating their strategic importance. China is the largest refiner of these minerals, which are abundant worldwide but are made ‘rare’ by the complexities of their processing - a sector dominated by China for decades.