Before the bell: Markets in Tokyo and Hong Kong Drop Sharply This Morning

U.S. trade tariffs are boomeranging back to Wall Street. Trump is also driving sentiment on other stock exchanges.

Stock markets around the world ended last week deep in the red. Trump announced that cars not manufactured in the U.S. will soon face a 25% import tariff. That’s a hefty rate. Investors are nervously looking ahead to Wednesday, which the U.S. president has dubbed “Liberation Day.” Another round of trade tariffs is expected. Some economists still hope Trump will tread carefully to avoid pushing inflation too high. Over the weekend, it emerged that U.S. embassies had sent letters to major European companies warning them to comply with Trump’s anti-diversity policies in order to do business with the U.S. government. France called this unacceptable interference. Will Trump’s bold approach in his second term continue to steer the markets?

With only today left in the first quarter, it’s time to take stock: Wall Street leads the losers, with the Nasdaq down 10.3% and the S&P 500 down 5.1%. The Euro Stoxx 50 is up 8.3%, the Bel20 gained 3.3%, but Hong Kong leads the pack with a strong 16.8% gain. Gold sparkled with a 16.4% increase. The precious metal serves as a safe haven in times of uncertainty—especially now that the U.S. is no longer fulfilling that role.

Asian markets are tumbling this morning. Japan’s Topix index is down 3.5%, and the Nikkei has dropped 4.1%. Nintendo (-6.2%) and Tokyo Electron (-6.4%) are performing even worse. In Hong Kong, stocks are down an average of 1.7%, with losses of 3.4% for Alibaba and 3.7% for BYD. Later today, investors in the U.S. will watch for PMI figures measuring industrial confidence. In Brussels, holding company Floridienne and Vranken-Pommery will release their results after the market closes.

Real Estate vs. Rising Interest Rates

Announcements of large-scale investment plans in Europe and German stimulus measures have pushed long-term interest rates higher. Since the start of the year, yields on government bonds in most European countries have risen by about 30 basis points (0.30%). Normally, real estate stocks are very sensitive to interest rate changes, yet they’ve remained surprisingly calm. In fact, the four regulated real estate investment trusts (REITs) in the Bel20 were among the index’s best performers over the past quarter. WDP gained 16%, Aedifica 11.7%, and Cofinimmo 10.3%. Montea lagged slightly with +5.9%, but still posted a notable 4% gain in March—the very month interest rates climbed. This likely signals that REITs had been oversold. Moreover, they remain solid defensive investments in these geopolitically uncertain times. At Spaarvarkens, we remain fans.

Strong Balance Sheet for Mega Logistics Project

Aalst-based Montea also made headlines following its inclusion in the Bel20 index on March 24. That’s too recent to have significantly driven the stock’s rise. Operationally and financially, Montea continues to perform strongly. Late last week, the REIT announced a new investment near Liège Airport, where a massive European distribution center is being built for U.S. footwear giant Skechers. The project, developed by the Weerts Group, will see Montea acquire a 40% stake for up to 140 million euro. It offers an attractive initial yield of 6%. Montea is able to seize opportunities like this thanks to its solid balance sheet.

Did you know…

China, Japan, and South Korea agreed this past weekend to promote free trade among themselves? It’s a direct response to the U.S. government’s new import tariffs.

This article was translated from Dutch and was originally published on Spaarvarkens.be.