Global equities markets have shown a surprising lack of concern for the newest tariffs enacted by the Trump Administration. Since August 1, the MSCI All Country World Index is up by under 1%. This reflects a jarring opposite to the deep selloff on April 2, when Trump’s previous tariffs caused the market to plunge.
On April 2, when the tariffs were first announced, they shook investors’ confidence, sending global stock markets into a freefall. This decision triggered the worst one-day drop in history for the MSCI All Country World Index. Investors were rattled by the economic fallout likely stemming from the tariffs—sparking a selloff that rippled through almost every sector. The reaction to Trump’s latest round of tariff escalation has been predictably tepid, signaling a sea change in investor sentiment.
The MSCI All Country World Index had shown surprising strength since the first week of August. Its rise of under 1% shows just how much investors are tuning out tariff-related news at this point. As a result, the market lost its cool earlier this spring in a dramatic fashion. Today, traders are much more used to the volatile environment produced by constant trade war news.
Analysts say that this shift in market response is indicative of a larger trend of desensitization to tariff news. Investors are looking for signs of recovery in the economy and from corporations themselves. Even more puzzling, they appear to be less worried about the shocks created by trade policy. Market participants aren’t making a big show out of their reactions to Trump’s new tariffs. That indicates they are focusing on long-term growth potential rather than short-term volatility.
Stock markets are just stuck in a very nasty, ugly dynamic right now. That’s why the MSCI All Country World Index is one of investors’ best barometers for overall market health. As far as signs of a slowdown, the index continues to rise, albeit slightly. All of this, of course, indicates that investors are getting used to the idea of a more tumultuous geopolitical environment.