Recently, the investor’s attention has been asked by foreign policy issues in both Europe and the United States. There seems to be a lot of uncertainty, but optimism has also begun to appear in the market.
The torque of foreign policy is formed by the president of the United States Donald Trump Customs speeches as expectations for Ukraine’s peace talks.
Customs speeches confused
Last weekend, Trump said he would set 25 % import duties for aluminum and steel. Danske Bankin senior analyst Antti Ilvonen It is a relatively moderate act, as steel and aluminum cover only about 2-3 % of the total imports of the United States.
Steel and aluminum duties are expected to enter into force in March.
By comparison, Ilvonen recalls that Trump’s import duties to China, Mexico, and Canada would have hit 45 % of the country’s imports the other week.
On Thursday, Trump, on the other hand, threatened his trading partners with reciprocal fires, that is, fires who are the same as each trading partner. For Europe, it would not be a particularly big issue, as the duties are, in principle, low and are already largely in line with their US counterparts.
However, Ilvonen wonders why Trump compared the VAT of the European Union countries to discriminate against US exports.
“There is virtually no sense in the idea, so it is still challenging to evaluate its effect,” Ilvonen writes in her weekly review.
Ilvonen believes that, at least in theory, Trump’s argument in the United States could increase the import duties in EU countries to a higher level than in Europe.
The market optimistic of the peace of Ukraine
European shares and euro exchange rate have been strengthened after Trump’s debate on Russian President Vladimir Putin with the Ukrainian Peace Agreement.
However, according to Ilvonen, European long -term safety and, through that, the attractiveness of European investments will not be served if Russia agrees to the peace of Ukraine across Europe and Ukraine.
In the short term, if possible peace in Ukraine would have a significant positive impact on the market, Ilvonen estimates. A positive energy supply of energy could brighten economic growth, but that would mean backpacking in Europe’s energy dependence.
The peace treaty also has an impact on Ukraine reconstruction. Ukrainian investment desires are unlikely to wake up if the peace treaty is not considered satisfactory.
However, peace talks are still in its infancy and Ilvonen reminds us that the marketing of the market may be premature.
If the conflict freezes or a poor peace agreement is negotiated in Ukraine, Europe may still have economic growth due to defense investments. However, defense investments will displace other activities and do not produce well -being in the same way as the activity of the private sector.