Power plays: Investing amid global political shifts

US President Donald Trump’s first months in office brought tariff woes, shaking up trade relations with countries from Mexico to China.

Next door, in Canada, the new prime minister emerges as a key player. He’s seen steering the nation through economic and political flux.

These shifts highlight a volatile landscape where policies, governance, and electoral results reshape power dynamics. They send ripples through financial markets, raising questions about what investors should do.

Tariff threat

In Trump’s first few weeks, he has upended global alliances with back-and-forth tariffs and policies. Sentiment on economic growth, equities, and commodities took a hit.

Tariffs dominated headlines. These not only strained US relations with long-time allies, like Canada and Europe, but also caused worries over potential higher inflation.

Weaker dollar and S&P sell-off

Source: Bloomberg

The US Federal Reserve took a cautious stance on policy rate cuts, saying they want a steady inflation downtrend to consider further rate reductions.

Meanwhile, the US Department of Government Efficiency’s move to layoff federal workers to “save taxpayers’ money” stoked concerns over the labor market.

US strategy: Stay defensive

Analysts now challenge the notion of whether the US exceptionalism narrative has gone past its peak, as market players navigate the Trump administration’s actions.

Consumer and business sentiment weakened given higher price expectations and unease in spending budgeted capital expenditure.

A wait-and-see stance is advised. The global desk’s strategy is to stay put on defensive names like healthcare and financials, which may still benefit from Trump’s other policies like deregulation.

Canada’s new man

Mark Carney, the former head of the Bank of Canada and the Bank of England, was elected leader of Canada’s Liberal Party. He succeeds Justin Trudeau as Prime Minister following the latter’s resignation in January 2025.

Despite lacking experience in elected office, Carney is considered well-equipped to address trade tensions with the US.

Canadian stocks and dollar moves

Source: Bloomberg

Carney is anticipated to pursue a centrist agenda, emphasizing trade and tariff management alongside robust economic growth. He committed to a firm retaliatory stance against US trade policies, likely employing a “dollar for-dollar” punitory strategy to secure fair trade terms.

To strengthen Canada’s economic resilience, Carney plans to prioritize fiscal stimulus and investment-driven policies. His plans to diversify trade partnerships to reduce US reliance.

Canada strategy: Maintain neutral

Despite Carney’s recent victory, Trump’s policy initiatives and Canada’s retaliatory measures sustained market unease. This led to a 1.5% day-on-day decline in the benchmark Canadian stock index and a slight depreciation of the Canadian dollar to 1.44 against the US dollar.

A neutral stance on Canada is warranted. Market dynamics are expected to adjust in response to Carney’s policy decisions, with volatility likely to persist in the near term.

Read here to read about what we think of China’s position, as the trade war escalates.

(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.) 

ANNA DOMINIQUE CUDIA, MBA, CSS, is the Head of Markets Research at Metrobank’s Trust Banking Group, spearheading the generation and presentation of financial markets insights to clients. She used to be with Metrobank’s Investor Relations, where she brought in international awards and took part in various multi-billion peso and dollar capital raising activities. She holds a Master of Business Administration (Finance) degree, with distinction, from the University of London, and industry certifications in finance. She is a naturally curious person and likes to travel here and abroad.  


SETH ANGELO GAMBOA is a Research Officer from Metrobank’s Trust Banking Group who covers both Philippine and offshore macroeconomic research. He graduated cum laude from the University of the Philippines Los Baños with a degree in Economics, specializing in Development Economics. He is a Licensed Fixed Income Market Salesman (FIMS) and is a Certified Treasury Professional (BAP-TCP). Seth enjoys playing video games, watching anime, and going on out-of-town trips with his loved ones. 



SOPHIA THERESE “PIA” BONIFACIO is a Markets Research Analyst at Metrobank’s Trust Banking Group, covering local and offshore macroeconomic research. She obtained her Bachelor’s degree in Economics with a Specialization in Financial Economics, cum laude, from the Ateneo de Manila University and is a Certified UITF Sales Person (CUSP). Pia enjoys long road trips and is a self-proclaimed milk tea connoisseur.