North American stocks tracked by ETFs around the world may have gained inflows since the market dip earlier this year despite a chaotic White House and uncertain market policy, but returns remain lacklustre.
TrackInsight data shows US equities have gained around $553 million of cumulative inflows since 1 January, racing past the dip in late January and early February when global equity markets sold off and volatility spiked.
Performance for US equities, however, remains choppy. On average, returns are barely positive at 0.4% year to date, after reaching around 4% just before the market fall. US markets then quickly plummeted to minus 5.4% and have therefore since recovered by only around half of its previous level.
(Similarly the MSCI World Index is only reaching 0.8%, having peaked at close to 7% before the dip.)
American politics in turmoil
The US stock market, although widely impacted by the global economy, also has ties closer to home. President Donald Trump has recently fired his secretary of state, Rex Tillerson, via tweet, as well as deputy FBI Director Andrew McCabe. His former chief economic adviser, Gary Cohn, has also resigned this month. Departures to his communications team, such as Hope Hicks, and Trump’s former aide, Rob Porter, have also depleted Trump’s inner circle.
On a macro level, the impact of Trump’s isolationist trade policy will be felt in the coming weeks as this Friday sees the implementation of his 10% tariff on aluminium and 25% tariff on steel. There appears to be no move to block the new tariffs, therefore these metal producers’ stock prices, as well as those of downstream producers, have already felt the first wave. Metal-related companies tracked by global ETFs are down around 3.3% on average year to date.
Wider ramifications as tariff feuds boil over
With Canada and Mexico exempted from the tariffs, other countries are seeking similar exemptions. The move is supposed to target China, but the country is only the fourth-largest exporter of steel to the US, after Canada, Russia and the UAE.
Analysts say that if the US does not choose to exempt allies and major trading partners, the global economic impact will extend beyond the metal industry, especially if the EU’s new ten-page list of tariffs are acted against by the US.