Increased customs duties announced by U.S. President Trump have led to significant declines in global stock markets, causing investor anxiety. Despite concerns of a potential recession, analysts suggest maintaining a long-term investment perspective and viewing current market conditions as an opportunity to acquire undervalued stocks. Companies like Schneider Electric and LVMH are particularly highlighted as strong investments during this turbulent period. Experts advise against panic selling and encourage strategic regular investments to navigate the volatility.
The Impact of Increased Customs Duties on Global Stock Markets
After U.S. President Donald Trump’s recent announcement regarding the hike in customs duties, global stock markets have experienced significant turmoil, leaving many savers feeling anxious. With a proposed increase to at least 10% on imports entering the United States, and even steeper rates for certain emerging and major economies, the immediate reaction has been a sharp decline in financial markets worldwide. As of Monday morning, the Paris Stock Exchange saw a staggering drop of -6.46%, while Hong Kong and Tokyo faced declines of -13% and -7% respectively. By the end of the day, Paris had settled at a loss of 4.83%.
This troubling situation raises concerns for investors. Is there a risk of further downturns, and what strategies should be employed during this crisis? Should one consider selling off assets or look for new investment opportunities amidst the chaos?
Dorian Abadie, a stock market analyst at Meilleurtaux Placement, offers some reassurance: “This is not a financial crisis akin to 2008; there aren’t widespread bankruptcies, particularly within the banking sector. Instead, this is a commercial crisis instigated by one individual.”
What Lies Ahead for Investors?
So, what can investors anticipate moving forward? “We’re all on the lookout for a positive development, perhaps negotiations with a country to alleviate customs tariffs,” explains Abadie. He references Trump’s strategy outlined in his book “The Art of the Deal,” which suggests starting negotiations with an extreme offer before settling on more agreeable terms. This presents the most optimistic outlook.
Conversely, the more pessimistic view is that Trump may be aiming to instigate a recession to lower rates and manage his debt, which could lead to a significant market crash—marking the first crisis created artificially.
Stay the Course and Look for Long-Term Gains
Despite the current market volatility, the specialist maintains a sense of optimism, advising investors to resist panic. “For those invested in the markets, a long-term perspective of at least 8 to 10 years is essential. The key is to make regular, scheduled investments, contributing the same amount every month to average out entry points. This strategy is particularly effective during sharp declines like the present. Selling now could be detrimental; after a steep drop, a strong rebound is often just around the corner, potentially yielding gains of 10 to 15% in a short period,” he adds.
Identifying Investment Opportunities
While waiting for the market to recover, investors should not sit idle. There are potentially lucrative opportunities available. “This is a time of sales, with many solid stocks currently undervalued. Companies like Schneider Electric, Total, Air Liquide, and luxury brands such as LVMH are seeing declines of -15%, -20%, or more from their historical peaks in 2024. These are fundamentally strong stocks that are likely to endure this turbulent period,” concludes Abadie.
Philippe Crevel, director of the Cercle de l’Epargne, echoes this sentiment, stating on BFMTV, “In times of market turbulence, selling is not the answer; doing so often results in losses. It’s actually a prime opportunity to make purchases. French and European companies are fundamentally sound, and once the dust settles, we can expect to see stock market increases.”
Investors are encouraged to compare the best offerings from brokers and banks to make informed decisions during this challenging time.