Markets and the regime of uncertainty

Markets are currently in a state of heightened nervousness and sensitivity to news. After the Supreme Court decision against Donald Trump, investors expected a calmer reaction, but this did not happen. The market often reacts not only to legal or political decisions themselves, but also to the subsequent actions of participants in the political process. The response in the form of introducing new global tariffs at around 15% became an additional pressure factor. Although such tariffs may formally be described as temporary, financial markets perceive such measures differently – as a potentially long-term instrument of economic policy. This creates a sense that trade restrictions may expand or change depending on the geopolitical situation.

For investors, this means a return of a period of uncertainty. When politicians strengthen protectionism, global supply chains begin to be assessed as more risky, and capital becomes more cautious. In such periods, capital usually prefers more resilient assets, companies with strong balance sheets, and predictable cash flows. Volatility ceases to be an exception and becomes almost a normal state of the market. Technology and export-oriented companies, which depend on international trade and the free movement of components between regions, turn out to be especially sensitive.

Global economies also react quite cautiously. European countries and China traditionally demand greater transparency in trade negotiations, as any new restrictions may affect exports, industrial production, and logistics costs. In conditions of uncertainty, companies begin to postpone large investment projects, and consumers become more cautious in spending, which ultimately slows economic growth. The market prices in the possibility of future negotiations and potential easing of tensions, therefore news about diplomatic contacts can lead to short-term growth in risk assets.

In the commodity market, a decline in oil prices is observed. This is related to investors assessing the probability of reduced geopolitical tension and possible improvement in relations with Iran, which could potentially increase oil supply on the global market. When the probability of conflict scenarios decreases, the so-called geopolitical risk premium in commodity prices declines. However, the commodity market always reacts not only to politics, but also to macroeconomic dynamics, including industrial demand and the level of economic growth in the largest economies.

The main event of the coming week will be the report of Nvidia Corporation. The company currently plays the role of a kind of indicator of the state of the entire artificial intelligence sector and technological investments. Its results may affect not only its own shares, but also the entire high-tech market, as investors often use the reports of industry leaders to assess the overall state of demand for computing power and the development of AI infrastructure. If the company’s financial results and forecasts confirm steady growth in demand for AI solutions, the market may receive a new impulse for growth.

The overall conclusion is quite simple: the market now resembles a reactive mechanism more than a directed trend. Movements occur not so much on the basis of fundamental long-term growth, but on the basis of political news, corporate reports, and expectations of future decisions. For investors, this means the need for a more flexible approach to strategy. Usually in such periods, attention increases to industry-leading companies with sustainable competitive advantages. At the same time, the speed of reaction to news and the readiness to take profits if market sentiment changes sharply are important.

Further movement scenarios also depend on the corporate reporting of technological giants. If Nvidia’s results confirm analysts’ optimistic forecasts, this may support the growth of the technology sector and risk assets in general. If, however, the report turns out weaker than expected or management’s forecasts are cautious, the market may move into a correction phase with increased volatility and more conservative investor behavior.