Saqib Iqbal Ahmed
NEW YORK (Reuters) - The first 100 days of President Donald Trump's tenure as the worst stock market has sparked expectations for a state of semi-permanent uncertainty since former President Richard Nixon's second term in 1973.
As investors eliminate consequences from the rapidly changing trade landscape, expectations for stocks, bonds and currencies have all become higher.
In early April, the CBOE volatility index (option-based investor anxiety range) closed at a five-year high, while FX and bond market volatility gathered. Since then, the volatility measures have returned, but are still higher than pre-employment levels.
Stock volatility futures have shown investors' expectations of growth for sustained volatility over the past few months.
“I think they inject a semi-permanent uncertainty here,” said Matt Thompson, co-fishing manager at Little Harbour Advisors.
Worries about how tariffs will affect economic growth, consumer spending and inflation have put the S&P 500 well below a record low in Trump's month in office, sending the index to the brink of confirming a bear market.
Although the stock has recovered, the S&P 500 lost 7.3% from the inauguration on January 20 until April 29, Trump's 100th day inauguration. This marks one of the worst performances after the index.
Calculate the 100-day period, excluding inauguration day, to show that Trump only took office, and the benchmark index fell 7.1% at the end of Wednesday, the worst performance in the worst period since Nixon.
The dollar also appears to be shaking, with the dollar index falling by about 9% in Trump’s first 100 days, the index’s worst performance in its first few months in office, suggesting investors are skeptical of U.S. assets.
However, over a 100-day period, the return on the U.S. Treasury market is measured by the U.S. Treasury Index, but the recent first term of President Bill Clinton was the second highest in recent presidential history.
"We are facing a global trade shift that began in the early 1980s," said Jack Ablin, chief investment officer at Creset Capital, Chicago.
While the temporary pause of some tariffs has brought some peace, investors are increasingly uncertain whether the world has changed in the foreseeable future.
Wednesday marked the first full 100 days of the second Trump administration.
The White House did not comment on the market decline in the first 100 days of the second Trump administration, but highlighted the progress made in curbing inflation and the investment commitments of large companies.
“In the March inflation report, monthly prices for Americans fell within 100 days of President Trump’s second term, while industry leaders from Apple to Hyundai to NVIDIA made trillions of dollars in historic investment commitments to put their historic investment commitments back in the U.S.,” White House spokesman Kush Desai said.
A sharp decline in history?
Past market starts poorly include former President Richard Nixon's second term and former President George W. Bush's first term.
"While this doesn't necessarily mean the entire market, it is recommended that it sets the tone for his tenure based on history," said Matt Gertken, chief strategist at geopolitics and American politics at BCA Research, a Montreal-based investment research firm.
During first 100 days of Nixon's second term stocks tumbled amid rising inflation and growing political uncertainty surrounding the Watergate scandal, with the S&P 500 dropping 9.7%, according to a CFRA Research analysis that counts 100 days including inauguration day.
By the time Nixon resigned on August 9, 1974, the index had lost nearly one-third of its value from the inauguration date.
The S&P 500 fell 6.9%, hurting the bursting of the Internet bubble in the bush, and the total fell by about 12% throughout the semester of the first semester.
Trump II and Trump
Compared with Trump's first term, the extreme decline in these 100 days has also declined.
In about 12% of the year Trump took office in 2017, investment in a basket of currencies fell by about 12%. This time, I fell in about 100 days and almost fell.
But while analysts’ downturn in the early days of their first term was attributed to the unexpected rise of Trump’s confrontational trade policy and the unexpected increase in global growth expectations, the left was hit by Trump’s protectionist agenda this time.
This has led investors to question the role of the dollar as a safe haven during a period of economic uncertainty.
Thierry Wizman, global and expense strategist at Macquarie, said the “big lesson from the first 100 days” is that the U.S. policy agenda is “negative to the dollar.”
The White House's Desai previously told Reuters that the Trump administration is committed to protecting the strength and strength of the dollar.
For stocks, Trump's first 100-day semester grew 5%, not counting inauguration. The stock recorded a 5.3% gain in the first 100 days, including the day he was sworn in.
Throughout Trump's first semester, stocks rose nearly 70%, while the dollar fell about 10%.
Still, some investors hope that the pace of action can be alleviated.
“The first 100 days are not abnormal, but the pace and speed of this activity may slow down as the administration is entering something slower,” said Shannon Saccocia, chief investment officer of Neuberger Berman Private Wealth, referring to the Trump administration’s expansion and tax cuts program.
(Reports by Saqib Iqbal Ahmed; other reports by Suzanne McGee, Lewis Krauskopf and Carolina Mandl; Edited by Megan Davies and Anna Driver)