Analysis of Global Stock Market Trends and Asset Allocation Strategies Amid Tariff Threats

Based on the latest market data and in-depth analysis, I will provide you with a systematic interpretation of global stock market trends and asset allocation strategies against the backdrop of tariff threats.

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Since returning to the White House in early 2025, the new U.S. administration has launched the largest tariff action since the Great Depression. According to data from the Yale University Budget Lab, the U.S. average tariff rate has risen from less than 3% at the end of 2024 to nearly 17%, generating approximately $30 billion monthly in revenue for the Treasury Department[1]. This policy has led to a profound reshaping of the global trade landscape.

Trading Partner	Tariff Rate	Response Measures
European Union	15%	Commits to large-scale U.S. investments in exchange for a framework agreement
China	145%	Trade surplus rises instead of falling, exceeding $1 trillion
Canada, Mexico	25%	Tariffs related to fentanyl
Japan, South Korea	Phased negotiations	Reaches limited exemption agreements

Based on the latest market data, tariff threats have had differentiated impacts on different markets and sectors[0]:

Index	Period Performance	Volatility	Position Relative to 20-Day Moving Average
Dow Jones Industrial Average	+3.09%	0.62%	Above the moving average
Russell 2000 Small-Cap Index	+5.82%	0.84%	Above the moving average
S&P 500 Index	+1.07%	0.53%	Near the moving average
Nasdaq Composite Index	-0.22%	0.73%	Below the moving average

• Beneficiary Sectors
  : Industrials (+0.42%), Financial Services (+0.30%), Consumer Staples (+0.25%) — Benefiting from expectations of domestic manufacturing reshoring and defensive demand[0]
• Impacted Sectors
  : Utilities (-2.95%), Communication Services (-1.15%), Consumer Discretionary (-0.79%) — Highly sensitive to trade, facing valuation pressure[0]

Announcement of Tariff Policy
    ↓
Rising Corporate Costs + Supply Chain Restructuring
    ↓
Downward Revision of Earnings Expectations + Slower Economic Growth
    ↓
Compressed Stock Market Valuations + Rising Volatility
    ↓
Declining Risk Appetite + Divergent Capital Flows

Historical experience shows that every major tariff policy announcement is accompanied by short-term sharp market volatility. For example, after the announcement of the “Liberation Day” tariffs in April 2025, the Japanese stock market fell 9.8% that day, U.S. stocks fell 5.4%, while the German stock market rose 7.1% against the trend (benefiting from expectations of export substitution to the U.S.)[1].

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In 2025, the gold market saw its largest gain since the 1979 oil crisis, with the international gold price surging from approximately $2,950 per ounce at the start of the year to nearly $4,600 per ounce by the end of the year, representing a year-over-year gain of over 70%[1][2]. The latest data shows the gold price is approximately $4,674 per ounce[0].

Indicator	Value
Period Gain	+83.53%
Highest Price	$4,698/oz
Volatility (Daily Standard Deviation)	1.20%
20-Day Moving Average	$4,505.41
50-Day Moving Average	$4,385.24
200-Day Moving Average	$3,795.52

Time Node	Tariff Event	Gold Price Reaction	Driving Logic
April 2, 2025	Announcement of “Liberation Day” reciprocal tariffs	Accelerated rise	Rising global trade risk premium
June 2025	U.S.-China tariff negotiations deadlocked	Continued upward trend	Uncertainty supports safe-haven demand
October 2025	Gold price breaks $4,000	Hits record high	Safe-haven demand combined with central bank gold purchases
December 2025	Institutions forecast gold to reach $4,900-$6,000	Approaches $4,600	Institutional consensus strengthens bullish momentum
January 19, 2026	Imposes 25% tariffs on Iran’s trading partners	Hits record high	Geopolitical risks combined with trade frictions

1. U.S. Dollar Credit Risk
   : The U.S. Dollar Index has fallen by approximately 9% since the start of 2025, potentially marking its worst annual performance in 8 years. The declining attractiveness of U.S. dollar assets has driven capital flows into gold[1]

2. Central Bank Gold Purchasing Demand
   : In 2024, global central banks’ net gold purchases exceeded 1,000 tons for the third consecutive year, setting a historical record. Gold’s share of global central bank reserves has risen to 20%, surpassing the euro’s 16%[1]

3. “De-dollarization” Trend
   : Central banks around the world are accelerating reserve diversification to hedge against U.S. dollar risk exposure[1][2]

4. Declining Real Interest Rates
   : The Federal Reserve launched an interest rate cut cycle in September 2024, with six rate cuts reducing the attractiveness of U.S. dollar assets, providing dual support for gold priced in U.S. dollars[2]

Based on historical data analysis, gold exhibits the following patterns during periods of escalating trade conflicts:

• Sudden and significant tariff rate hikes (acceleration within 1-2 weeks)
• Breakdown or deadlock in trade negotiations (sustained support)
• Concerns over global supply chain disruptions (sudden surge)

• Reach of trade agreements or signs of de-escalation (technical pullback)
• Short-term strengthening of the U.S. dollar (periodic suppression)
• Rebound in market risk appetite (capital diversion)

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Amid ongoing uncertainty from trade frictions, it is recommended to adopt an asset allocation strategy centered on

:

Asset Class	Allocation Ratio	Core Logic
Gold	10-15%	Core safe-haven asset, hedging geopolitical and currency risks
Bonds	25-30%	Treasury bonds provide a safety cushion; investment-grade corporate bonds generate stable returns
Defensive Stocks	25-30%	Consumer staples, healthcare, utilities (low beta)
Cash Reserves	10-15%	Maintain liquidity to respond to market shocks
Alternative Investments	10-15%	Commodities, hedge funds, reducing portfolio correlation

┌─────────────────────────────────────────────────────────────┐
│                    Trade Friction Life Cycle                │
├─────────────┬─────────────┬─────────────┬───────────────────┤
│ Escalation  │ Peak        │ De-escalation │ Uncertainty Phase │
├─────────────┼─────────────┼─────────────┼───────────────────┤
│ Increase gold holdings │ Maintain defensive allocation │ Moderately increase risk assets │ Maintain flexibility │
│ Increase bond holdings │ Cash is king │ │ Adjust positions quickly │
│ Reduce cyclical stocks │ │ │ │
├─────────────┼─────────────┼─────────────┼───────────────────┤
│ Expected duration 1-3 months │ Market priced in, valuations bottom out │ Risk appetite rebounds │ Monitor policy signals, take profits timely │
└─────────────┴─────────────┴─────────────┴───────────────────┘

• Reduce Allocation
  : Technology hardware, consumer discretionary, and export-oriented industries with high trade sensitivity
• Increase Allocation
  : Industrials, healthcare, and consumer staples sectors benefiting from localization trends
• Focus On
  : Industry leaders with pricing power to withstand cost pass-through pressures

• Core Allocation
  : U.S. Treasuries (benefit from yield curve steepening)
• Moderate Allocation
  : Investment-grade corporate bonds (credit spreads may widen)
• Avoid
  : High-yield bonds (credit risk premiums rising)

• Overweight Gold
  : As portfolio insurance (10-15% allocation)
• Neutral Allocation to Industrial Metals
  : Copper, aluminum (demand from supply chain restructuring)
• Underweight Energy
  : Crude oil (weak demand expectations, geopolitical premium already priced in)

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Risk Event	Expected Timing	Potential Impact
U.S. Supreme Court ruling on tariff legality	Early 2026	Possible overturn of some tariff policies, triggering sharp market volatility
U.S.-China trade agreement negotiations	2026	Risk assets rebound if an agreement is reached; gold continues to rise if deadlock persists
Review of U.S.-Canada-Mexico Free Trade Agreement	2026	Uncertainty over North American supply chain restructuring
European Union’s tariff decision on China	2026	New variable in the global trade landscape

• Goldman Sachs
  : Expects gold to rise to around $4,900 per ounce by the end of 2026, with structurally strong central bank gold buying demand[1]
• JPMorgan
  : Expects gold to rise to $5,055 in Q4 2026, potentially testing $6,000[1]
• Schroders
  : The U.S. faces policy uncertainty and fiscal fragility, making gold a priority for asset allocation diversification[1]

Amid ongoing market disruptions from trade frictions, investors should:

1. Maintain Strategic Resolve
   : Do not alter long-term allocation frameworks due to short-term volatility
2. Strengthen Risk Management
   : Set stop-loss levels and control single-asset exposure
3. Manage Allocation Timing
   : Deploy counter-cyclically during market panic, and gradually take profits amid optimistic sentiment
4. Monitor U.S. Dollar Trends
   : Periodic U.S. dollar strength may present gold buying opportunities

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The chart above shows:

• Correlation between gold prices and key trade friction events
• Volatility characteristics of monthly returns
• Sector performance divergence (defensive vs. cyclical)
• Return comparison across asset classes

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[1] Xinhua News Agency - Multiple institutions expect U.S. dollar assets to become less attractive in 2026, with gold continuing to rise (http://www.news.cn/world/20251225/612ade0c0c144e45bc112ce50c25edae/c.html)

[2] The Paper - “Gold in troubled times, collectibles in prosperous times”: 2025 gold price surge marks the biggest bull market in decades (https://www.jfdaily.com/wx/detail.do?id=1044732)

[3] Sina Finance - Gold and silver prices hit record highs as Trump’s tariff threats against Europe spark safe-haven demand (https://finance.sina.com.cn/stock/usstock/c/2026-01-19/doc-inhhuvac8148327.shtml)

[4] Deutsche Welle - Trump reshapes 2025 global trade landscape: What uncertainties lie ahead next year? (https://www.dw.com/zh/特朗普重塑2025全球贸易格局-明年将面临哪些不确定性/a-75269514)

[5] Yahoo Finance Taiwan - 2025 stock market rollercoaster: Trump’s moves spark market storm (https://tw.stock.yahoo.com/news/2025年股市雲霄飛車-川普動向掀起市報風暴-094415890.html)

[6] World Journal - Analysts offer 2026 stock investment strategies: Don’t bet against the White House (https://www.worldjournal.com/wj/story/121477/9273684)