The balcony above the Euronext trading floor on Monday, March 13, 2023 in Paris, France.
Nathan Lane | Bloomberg | Getty Images
U.S.-traded funds tracking global stocks retreated sharply on Wednesday as investors viewed a Donald Trump victory as negative for international stocks.
iShares tracks closely watched exchange-traded funds South Korea, Hongkong, Taiwan and Chile All fell in Wednesday trading. This comes despite major U.S. stock indexes surging to record highs.
These particular pullbacks come as traders prepare for President-elect Trump’s proposed import tariffs. He imposed tariffs of up to 20% on all goods entering the United States, and specifically imposed tariffs of up to 60% on goods from China.
The policy is unpopular with voters, according to an NBC News poll. But that doesn’t seem to matter in the campaign, even though the economy more broadly is a Main questions For Americans heading to the polls.
“While the U.S. investment environment remains favorable, international markets are highly vulnerable to tariff policies,” said Yongyu Ma, chief investment officer at BMO Wealth Management. “This uncertainty may limit the near-term gains in global stock markets.”
The moves reflect the divergence between U.S. and international markets as global investors focus on the outcome of the U.S. election.
Although Dow Jones Industrial Average European markets had their best day in nearly two years on Wednesday but were largely in trouble as Trump’s victory became apparent. In the US market, iShares Core MSCI Europe ETF (IEUR) A drop of more than 2%.
Asia-Pacific markets were mixed, with Japan’s Nikkei 225 Index bucking the trend and falling. Nonetheless, those listed in the U.S. iShares MSCI China ETF (MCHI) It fell more than 2% on Wednesday.
However, Global X MSCI Argentina ETF (ARGT) It rose more than 2% and hit a 52-week high, becoming a rare bright spot among international funds. The South American country last year elected Javier Milei, a liberal who has been widely compared to Trump, as president.
The ICE U.S. Dollar Index, which tracks the U.S. dollar against a basket of international currencies, reached its highest level since July. Adam Turnquist, chief technical strategist at LPL Financial, pointed out that the dollar’s rise comes as inflation expectations rise after Trump wins the election.
Turnquist said continued strength in the U.S. dollar could harm international stock markets, especially those in emerging markets. These markets have lagged their U.S. peers in recent years. really, iShares MSCI Emerging Markets ETF (EEM) It fell more than 1% on Wednesday.
—CNBC’s Sarah Min, Jesse Pound and Hakyung Kim contributed to this report.
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