Wall Street split on near $1tr wipeout

INVESTORS AND ANALYSTS DEBATE GLOBAL IMPACT OF PROTECTIONIST RHETORIC

As Wall Street analysts debate what comes next amid heated rhetoric over tariffs and retaliation, investors aren’t sticking around to find out.

The S&P 500 Index tumbled in late trading Friday, with the cascading losses wiping almost $1 trillion (Dh3.67 trillion) from global equity markets since President Donald Trump touched off a trade skirmish with China.

The late swoon broke hours of indecision on equity markets as investors and analysts debated whether the new protectionist rhetoric would upend the global order or be dialled back.

“You don’t know what will happen over the weekend in terms of tariffs, trade wars or side agreements,” Tom Mangan, senior vice president of James Investment Research in Xenia, Ohio, said by phone. “But I think people are tired of the whole mess and are willing to take some money off the table and go home.”

While investors clearly want to keep risk off the table heading into the break, the Street remains divided on how the latest unease will play out. Here’s what money managers and analysts are saying:

According to Matt Maley, Miller Tabak equity strategist, “Although Trump might not get us into a full-blown trade war, it sure seems like he is intent on changing the situation in a significant way. Therefore, we think those who say it will be a non-event ... are on shaky ground.”

Daniela Mardarovici, portfolio manager at BMO Fixed Income said, “In these types of situations, the initial messaging can be quite protectionist in nature. After the fact, more frequently than not, President Trump has managed to make concessions that have alleviated some of these concerns. We would expect — the first reaction notwithstanding — that there will be discussions that will moderate the outcome.”

Kim Wallace, Eurasia Group managing director believes that a compromise is “within reach.” But Larry Peruzzi, director of international trading at Mischler Financial Group Inc points out the concern. “People are worried about holding stocks over the weekend. Stocks are breaking through support around February lows, we’re getting a war-drumbeating national security adviser.”

Hans Redeker, Morgan Stanley’s global head of foreignexchange strategy thinks the focus will be on China.