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The sale of the US stock market can encourage investors to consider again allocation funds worldwide.
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Trump’s policy, including rates, increases the uncertainty about the economic outlook of the US.
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Foreign investors can shift to European and Chinese markets in the midst of American economic problems.
The sale in US stock markets that are fed by fear of a recession can encourage investors to place their money elsewhere, which changes global financial movements.
Foreign Investors – who have $ 17.6 trillion in US shares – can be tempted to get some of their money from the US.
Monday’s sale is because investors are already massive changes in the US roads that have increased policy uncertainty, including rates, deportations and mass cuts on the Doge. These changes can undermine economic risk feature and increase the risk of recession, in turn that the US stock market of $ 60 trillion reaches.
Investors are so rattle that the S&P 500 this year has lost 4.5% this year, while the technically heavy Nasdaq composite has fallen by 9.5% earlier this year.
Trump has traced the economic fall -out of rates and says that the American economy is going into a “transition period” and adjustment. During a Sunday interview, he did not exclude a recession for making markets.
While Trump’s first policy is echoing the first policy around the world, large economies – including Europe and China – are increasing the policy stimulus to stimulate growth. Their movements can make these markets more attractive for investors.
If the US economy slides into a recession, foreign investors can re -assign their participations of US shares to the American debts, written Nomura.
“After all, there is no useful alternative to the USD as the reserve currency of the world, the Nomura analysts wrote.
However, this may not be the case if a recession occurs.
“In the case of an American recession and large-scale destruction of wealth, and because of the sharp rise in the returns of the foreign sovereign bonds, there seems to be room for decoupling USD assets,” they wrote.
Some foreign investors can repatriate their money. Over time, a new global reserve currency could arise next to the dollar.
“It would have riveted only a month ago, but after the tax paradigm shift from Europe it might be the euro,” wrote Nomura analysts.
On Sunday, Goldman Sachs said that some investors are considering entering China’s stock markets again as shares in the second largest economy in the world a revival after the boost of the Deepseek hype.
