Beware the drumbeat of stock prices

[SINGAPORE] US President Donald Trump’s tariffs have weighed on the stock market, driving the Nasdaq Composite Index into a bear market in early April. At its lowest, the index was down by over 24 per cent from its peak.

As stocks fell, two major US banks, JPMorgan and Goldman Sachs, raised the odds of a recession. For a moment, the situation looked bleak. Then came the big U-turn: Trump paused his threat of higher tariffs for 90 days.

Stocks surged in response. As at last Friday (May 9), the Nasdaq has risen by over 17 per cent from its low. Curiously, as share prices rose, news of a potential recession quietened down, seemingly indicating that the risk is off the table.