Reuters reports:

President Donald Trump’s tariffs have spooked investors, with fears of an economic downturn driving a stock market sell-off that has wiped out $4 trillion from the S&P 500’s peak last month, when Wall Street was cheering much of Trump’s agenda.

A barrage of new Trump policies has increased uncertainty for businesses, consumers and investors, notably back-and-forth tariff moves against major trading partners like Canada, Mexico and China.

“We’ve seen clearly a big sentiment shift,” said Ayako Yoshioka, senior investment strategist at Wealth Enhancement. “A lot of what has worked is not working now.” [Continue reading…]

Reuters reports:

For most of the last three years, investors had bet on “U.S. exceptionalism,” with the country ahead of others in economic growth, stock prices, artificial intelligence and other areas.

“The world now sees the U.S. model is changing, and saying – we need to adapt to that, the U.S. is no longer as reliable as a trade partner, we have to take care of our own needs on defence,” said Tim Graf, head of macro strategy for EMEA at State Street Global Markets.

The change in sentiment has fuelled a rare divergence in global stock markets.

While the S&P 500 stock index is down 1.8% this year, European shares are up almost 9% at a record high, and tech stocks in Hong Kong have surged almost 30%.

The euro shot to a four-month high above $1.07 and a number of banks have raced to ditch their recent calls for a drop to parity against the dollar.

Investors have chopped their bullish bets on the dollar in half to around $16 billion since U.S. President Donald Trump’s inauguration in January, based on weekly data from the Commodity Futures Trading Commission.

“Go back to December, this overwhelming consensus about U.S. exceptionalism, and U.S. was the only place to invest,” said Dario Perkins, managing director of global macro at TS Lombard, an economic consultancy.

“What’s really happened here is this threat of tariffs and the aggressiveness of Trump is forcing other countries to spend more.”

In his first 44 days in office, Trump has ripped up the playbook on foreign relations in place since 1945, launched a global trade war by slapping tariffs on his country’s largest trading partners and forced European leaders to drastically rethink how they fund their own security.

Tariffs and trade uncertainty are causing the U.S. economy to lose steam, and companies more vulnerable to slower growth are starting to show the cracks.

An index of U.S. banks has lost 8% in the last month, while its European equivalent, opens new tab has jumped 15%.

Investors have poured money into Europe to diversify away from the U.S. market. [Continue reading…]