Macroscope | For investors, Donald Trump’s tweets just sow confusion. In the trade war with China, they undermine his own position
- The president’s Twitter missives make news, but their erratic musings also make for confusion about US policy direction
- Even his negotiating partners in Beijing are starting to realise that such ramblings reveal he won’t honour any deal
There are plenty of reasons why investors should think twice about following US President Donald Trump on Twitter.
Aside from the fact that the former reality TV host invariably speaks and tweets off the cuff and is notoriously unpredictable, financial markets have a track record of misreading America’s president.
Before his victory in the 2016 election – and even in the hours following his triumph – investors were convinced a Trump presidency would be disastrous for asset prices.
After it became clear Trump’s pro-growth agenda would be a boon to stock markets, investors downplayed his protectionist and nationalist policies, so much so that the benchmark S&P 500 index continued to rise for several months after the US imposed the first round of China-specific tariffs last year.
Even after the trade war escalated in May, stocks bounced back after a brief sell-off, partly on hopes that talks would resume.