According to a study by the American investment bank JPMorgan, President Donald Trump’s impact on the market through his media platform “Truth Social” has been relatively less since the start of his second term compared to his first term in office.
The bank’s analysts found that out of 126 posts made by Trump on sensitive topics such as trade, tariffs, foreign relations, and the economy since the beginning of his second term, only 10% have caused noticeable market fluctuations.
However, this number is on the rise. Last week, he posted over 20 articles related to these issues, double the average for January, but still far below his peak during 2018-2019 when he protested against unfair trade policies of countries like Mexico, with 60 posts per week.
In a statement released by JPMorgan on Monday, they stated that “posts related to tariffs had the greatest impact on the market,” adding that nearly one-third of the posts had an influence on the market.
So far, the most significant impact of Trump’s posts was seen in early February when the Mexican peso and Canadian dollar both dropped over 2% and 1%, respectively, after Trump announced imposing a 25% tariff using emergency powers on Mexico and Canada. However, he later postponed the implementation.
Posts focusing on China have resulted in fluctuations in both directions due to their different tones.
Shortly after winning reelection, Trump threatened to impose tariffs on fentanyl supply, leading to a drop in the Chinese yuan. However, in mid-January, after what he described as a “very good” phone call with Chinese President Xi Jinping, the yuan’s exchange rate saw an increase.
JPMorgan analysts stated that their backtesting shows that trading based on Trump’s posts has not yielded significant profits so far.
They mentioned that buying the US dollar within 5 to 180 minutes after each post, compared to buying a basket of G10 high beta currencies or the most directly affected individual currencies, would be “disappointing,” with estimated returns not exceeding 4% even under “highly optimistic” assumptions.
Despite posting fewer market-influencing messages on social media at this stage, Trump has increased direct communication with the media from the Oval Office in the White House, engaging in daily question-and-answer sessions with reporters.
(Reference: Reuters)