22.01.25 - Fresh optimism in the tech sector

What a spark in the tech sector. The mix of news from White House and Netflix with the release of its fourth quarter results gave the tech sector a big boost, starting during yesterday’s late trading session already.
President Trump announced a joint venture, Stargate, to invest billions in the artificial intelligence (AI) infrastructure over the next years. Furthermore he is considering a 10% tariff on all Chinese imports, could be in place by beginning of February. Mexico and Canada are braced for tariffs of 25%. Fresh tariff threads against the European Union also on the agenda.

Markets: Today’s market saw sharp contrasts. China’s stock markets down while European markets follow the US strength.
Crypto investors continue to wait on the sideline, hoping for a push from politics. In the US only tech and AI related sectors with strong gains, other industries in the red. Interest rates with an increase.

My View: News-driven markets, often triggering strong reactions - a trend likely to become more common. The topic of tariffs has a significant short-term impact on the markets, leaving investors on edge. So far, the actual numbers have been somewhat modest. However, during his campaign, Trump had threatened to impose global tariffs of 10%-20% and an extraordinary 60% tariff on China.
Today’s rally is not broad based as most US sectors, except tech, are trading in the red. I avoid chasing such market fluctuations driven by speculative investors. This rally could be short-lived. Instead, I maintain a steady approach, focusing on capitalizing on opportunities as they arise, e.g. volatility and semiconductors, long respectively short (ETF).

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