00:00Fiona Sincotta is Senior Market Analyst at Citi Index. Joining us now, hello Fiona.
00:05Interesting what Mitch was just saying is that the mood on Wall Street is they're kind of shaking off these announcements by Donald Trump of tariff plans,
00:14seeing it as noise until I guess it becomes fact.
00:18Would you agree that investors are just getting on with business and leaving Trump to do Trump?
00:23It does feel that way. I mean, I think there's definitely a sense that the markets have been desensitized to Trump's announcements.
00:34If we think back to April when he made the initial Liberation Day announcements, you know, caught the market a little bit by surprise and we saw massive volatility on the back of that.
00:45And then we've seen sort of, you know, push back on those tariffs, pedal back, push forward and new announcements, deadlines reversed.
00:54I mean, there's just still so much sort of wish-wash uncertainty with it that I think actually the markets are just a little bit numb to the latest developments.
01:03And that's why we're pushing forward. And I think, you know, we do see sort of very sector-specific responses to specific tariffs.
01:14For example, when we saw copper, that did have quite a big impact on the price when that one was announced.
01:20But broadly speaking, as far as sentiment is concerned, the market's pushing forward with business as usual.
01:27Trump has been saying that he reckons by Thursday there could be an EU-US deal.
01:32We haven't heard anything yet, but Thursday is still in play.
01:36Could the announcement of a deal between the two move the markets or does it all depend on what tariffs are in place?
01:44Yeah, I think it does depend on what tariffs are in place here.
01:48I mean, there's quite a lot of optimism.
01:50I mean, if we look at sort of European stocks, they're trading, you know, we had the DAX hit record highs.
01:56Euro stocks also around, you know, very high levels here.
01:59So I think there is a sense of optimism of what will come from this.
02:03It's not expected to be as bad as those Liberation Day announcements.
02:07You know, the mood music coming out has been really quite optimistic that talks are going well.
02:14There are certain sectors, obviously, that are going to be very much in focus here.
02:18The auto sector, they obviously, there's a lot of exports to the US.
02:23Pharmaceuticals as well.
02:24We know that that's an area that Trump has an eye on as well.
02:27So I think the market's going to be watching what's being said about those.
02:31But I think as far as sort of the mood music is concerned, it does seem to be that we're heading for a more optimistic outcome than the Liberation Day tariffs from April.
02:41What's your view of what Trump has said about Brazil, that he's threatening a 50% tariff, which is quite unexpected because Brazil imports more than it exports to the US.
02:53And of course, we're hearing that Trump's very unhappy with the way the former president, Jair Bolsonaro, is being treated.
03:00How are the markets reacting to that?
03:02And could that set us up for a new trade war?
03:04Because we're hearing from Lula da Silva that he is going to reciprocate if Donald Trump makes good on those threats.
03:11Yeah, this is a really interesting turn from Trump because, as he pointed out, you know, that Brazil really does import more goods from the US than it exports.
03:22So there doesn't seem to be that sort of trade basis that we've often heard from Trump.
03:27This is very much more geopolitical.
03:30It does feel that he's just trying to involve himself in domestic politics in a slightly sort of new turn of direction.
03:38Now, I mean, again, this is a threat.
03:40We've had threats from Trump before.
03:4150% is a big number.
03:43But we are hearing from a potential kickback from Brazil as well.
03:47As far as the reaction to the market, I think what we're going to be looking for here is food prices.
03:51I mean, if we think about what Brazil does send to the US, coffee, orange juice, very big suppliers for the US in these markets.
04:01So that's what we're going to be watching.
04:03And we did see the real come under pressure.
04:05It fell around 2.5% in earlier trade against the US dollar.
04:09So there is some impact in the market.
04:11But again, it's not the first time we've heard threats from Trump and big numbers being tossed around.
04:16So, again, it's not necessarily going to be the final number that we have thrown in here.
04:23But I think he's just trying to muscle in a little bit on geopolitical situation there.
04:28Thanks so much for your analysis.
04:29Much appreciated, Fiona Sincotta, Senior Market Analyst at City Index.
