This week, JPMorgan Chase conducted its annual survey targeting institutional trading clients, unveiling profound insights from traders across the globe about the market landscape expected in 2025. The results of this survey highlighted overwhelming anticipation among traders regarding tariffs and inflation as pivotal influences that will significantly shape the market in the coming years, further indicating a trend toward heightened market volatility becoming the new normal.

The survey attracted a substantial number of participants, totaling 4,233 respondentsNotably, an astonishing 51% of these traders identified inflation and tariffs as the most critical potential factors likely to dominate market dynamics this yearThis figure marks a pronounced increase compared to last year's statistics; although inflation was still a primary concern for traders, only 27% of last year's respondents viewed it as a significant issueThis shift reveals the intensifying prominence of tariff and inflation-related issues that have emerged in the past year, now wielding a deeper impact on global markets.

In recent years, the United States has experienced frequent fluctuations in its tariff policies, leading to considerable instability in the market this yearThe U.S. has threatened to impose tariffs on foreign imports and specific commodities targeting certain sectors or countriesSuch measures can be likened to a stone cast into a tranquil pond, creating ripples of uncertaintyA prime example is the announcement on a Saturday regarding a hefty 25% tariff on goods from Mexico and Canada, which instantly triggered panic in the market, causing major stock indices to plummet on Monday

Advertisements

Market participants expressed concerns that these tariff policies would severely disrupt global supply chains, raising costs for companies and thereby inevitably impacting overall market conditionsInterestingly, just a day later, the announcement to postpone the tariffs on Mexico and Canada led to a swift rebound in the stock market, further illustrating the extreme volatility triggered by shifts in tariff policies.

A significant portion of market participants firmly believes that a strong correlation exists between tariffs and inflationThe increase in tariffs directly raises the costs associated with imported goods, which are ultimately transferred to consumers, leading to heightened pricesAccording to Chauncey Enzulu, the Global Head of Fixed Income, FX, and Commodities e-Trading at JPMorgan, "At the beginning of this week, we observed a notable increase in trading activity as traders sought to rebalance their portfolios due to fluctuations in specific currencies such as the Canadian dollar and the Mexican peso, which saw volatility in the range of 1% to 2%." Such fluctuations have exacerbated instability in the market, prompting investors to frequently adapt their strategies to mitigate risks.

In stark contrast to the heightened focus on tariffs and inflation, fewer traders perceived a potential economic recession as a factor that could influence this year's marketOnly 7% of respondents expressed this viewpoint, a stark contrast to the 18% figure from 2024. This may suggest that despite the numerous challenges faced by the global economy, traders' concerns about economic recession have somewhat subsided, prompting them to redirect their attention to the pressing issues of tariffs and inflation.

When asked about the most significant challenges anticipated in 2025, volatility emerged as the foremost concern among traders, continuing from their worries in 2024. This year, 41% of respondents identified volatility as their primary challenge, underscoring a significant increase from the 28% noted in the previous year's survey

Advertisements

Advertisements

Advertisements

Advertisements