Trade skirmishes, tech misses and shock geopolitics cause volatility????

Prospects for the global economy are shrouded in uncertainty amid the latest tariff developments causing fresh jitters of concern through global markets. Negative sentiment is hung over the FTSE 100 at the open, following falls in Asia. Ongoing reassessments about the huge sums forecast to be spent on the AI revolution is also set to cause fresh volatility on Wall Street, after Alphabet and semi-conductor company Advanced Micro Devices missed revenue estimates for their key cloud and data centre businesses.

Trump is playing a treacherous trade game, with threats of tariffs still dangling over major economies, while the tit for tat game with China is escalating. Although a mini wave of relief cascaded over financial markets after duties on Canadian and Mexican imports were delayed, the effects of tariffs on Chinese goods are now causing fresh ructions.? The Shanghai Composite Index and Hong Kong’s Hang Seng have fallen back after the Lunar New Year holiday as traders assess the repercussions. E-commerce stocks were among the hardest hit after US postal service suspended indefinitely incoming parcels from China and Hong Kong. JD.Com slid around 4%, while Alibaba also headed lower, before recovering. There are expectations of considerable disruptions to overseas deliveries and dents in future consumer demand. It’s likely to spark chaos in logistics hubs as packages mount up, snarling up delivery services.

The indefinite ban on small parcel imports in the US could cause fresh delays to Shein’s controversial planned listing on the London Stock Exchange, given the risks posed by ongoing tariff wars to its business model. Shein is highly reliant on keeping prices low by not being subject to import duties on low-value individual parcels sent directly to customers overseas. The US administration has now closed this loophole, known as “de minimis” in the United States. If Shein can’t compete so easily on price in a major market like the US, it’ll be a much harder sell, particularly given it also faces claims of environmental recklessness and poor working conditions in its supply chains. This is likely to knock potential investor sentiment and make it harder to achieve a hoped-for blockbuster valuation. It’s also set to reignite calls for a similar move to be made in other countries to offer protection to hard-hit domestic retailers. Superdry’s cofounder Julian Dunkerton has called on the UK government to stop Shein ‘dodging tax’ by using this advantage by importing single parcels. The government is walking a tricky tightrope, trying to stay out of a trade war, but will have to deal with fall out.

?President Trump’s startling statements about the US taking over the Gaza strip, resettling Palestinians, and turning the land into the ‘Riviera of the Middle East’ underscores how unpredictable the communication missives from the White House will be during his term. The pledge is being met with perplexity and astonishment and will do little to calm tensions in the region. Meanwhile the US has toughened its stance on Iran, intending to drastically limit the country’s oil exports. As this is stance would affect supplies on the market, is likely to be helping keep a floor on crude prices to some extent. However, the big focus for oil traders right now is the bleaker prospects for the global economy and the knock-on effect on energy demand, amid the trade war skirmishes, with Brent Crude falling below $76 a barrel.

?Wall Street’s tech darlings are set for another round of volatility, after key players in the AI technology space disappointed investors with their latest updates, particularly the miss for Alphabet for its Cloud computing business – more from my colleague Matt Britzman below. ?But there was also dissatisfaction with the latest numbers from Advanced Micro Devices. AMD sells a range of microprocessors and graphics cards and has been considered to be one of the few players with the technology capable of powering the latest advances in artificial intelligence. Although fourth quarter results beat expectations for sales and earnings, the firm missed forecasts for sales of chips for the data centre market, seen as crucial for future revenue growth and the softer outlook ahead knocked confidence further. Investors were always going to be more sensitive, given the arrival of new kid on the block, DeepSeek, the Chinese startup which has used low-cost chips to power its large language model, and there were big falls in the stock in after-hours trading. As far as Alphabet is concerned, search is still firm’s crown jewel and a lot is going to depend on how well the company integrates AI here as a miss could dent Google's dominance.