EPA
The markets are in shock from the pricing announcements of American president Donald Trump, but the American chief is his decisions, defending his policies and saying “sometimes you have to take medication to repair something”.
The experts answered some of the questions you sent us while the world is trying to give meaning to the turmoil and wonder how long it will continue.
Read their answers below.
How does a stock market index work?
Simon Jack, the BBC sales editor, said that the FTSE 100, which represents the 100 largest companies publicly listed publicly in the United Kingdom, were all “put in a big bucket in 1984” and gave a certain weight in this bucket according to the size of these companies.
The stock market is a reflection of their total value over time. The larger the company, the more weight it has in the index. For example, an astrazeneca or an HSBC has more weight than the others.
It also works in the United States with the S&P500, which is made up of the 500 largest companies, with a huge concentration in certain names like Apple, Nvidia and Amazon.
The stock market explains to you how the value of the shares of these companies has changed – emphasizing these biggest names.
In general, this is an indication of what some of our largest companies are worth, and when they go up or down, that tells you something about the feeling of knowing whether their profits are likely to increase or fall in the future.
How does a market slowdown affect pensions and daily life?
Jack explains that what’s going on on stock markets is not necessarily the same thing that happens in the economy. They can be linked, but they are not exactly the same.
Some people invest directly in actions – and this will certainly affect them. These are large falls, among the largest we have seen in a few days since Pandemic panic entered the markets in 2020.
The other way people are exposed to these changes are through their pension funds. Investment in pension funds is a long -term game. All your money will not be in stocks – some will go into state obligations, and the closer you get to retirement, the more weighting you will have in things like money and government obligations, so the less it will affect you.
There are two types of pensions: a defined service pension – where you get a promised percentage of your retirement salary – and a defined contribution – where the value of your pension pans will increase and drop with the financial markets.
Pensions are exposed right now, but pensions investment is a long -term game.
The warning panel that flashes here is not the value of your pan – this is what will happen to the savings in which we live and work all.
Many people say that the chances of recession in the United States, the United Kingdom – and even worldwide – have increased a notch, which has implications for things like jobs and wages.
What is the popularity of prices in the United States?
Bloomberg’s political editor Laura Davison said the prices, before last week’s announcement and currently, are quite unpopular.
Trump’s initial figures on the way he manages the economy – what people think of his economic policies – are actually quite poor.
It is a kind of surprising turning point: one of the reasons why Trump beat Kamala Harris in the 2024 elections is that the voters were disturbed by high prices and what they received as a poor economy.
But what can really materialize in these prices is that prices can increase considerably for American consumers, because essentially all these products abroad become much more expensive to buy.
There could be inflation and we could also see an economic slowdown and potentially a recession.
What is the quantity of China?
Some believe that the whole exercise concerns an economic proxy war with China and the whole game is to try to level a little game a little, said Jack.
But Trump is right in one respects, namely that the American markets are much more open to foreign products that many foreign markets are open to American products.
The United Kingdom, for example, puts a 10% price on American imported cars, 14% on certain types of beef and 8% on other things. There are therefore obstacles in both directions.
And while Trump says that other countries have snatched the United States, it is the American companies that reasonably continued the value of shareholders by trying to put their production facilities in the best places strategically and economically.
It was the head of American companies who opened subsidiaries in Ireland, where there is a low tax rate, and has put manufacturing in Vietnam or Cambodia. In a way, this was the kind of rational prosecution of maximum profit, a system that made the United States very rich indeed.
China also becomes very rich, and it certainly rises the value chain.
There is a feeling that the United States was very comfortable when China made cheap sneakers and t-shirts, but when China is starting to make supercomputers and missiles, the United States becomes a little more concerned, and this is one of the reasons why you see some of these tensions appear.
Will the markets recover?
This is really the unknown question at the moment, said Davison, but something we can expect is more volatility.
We had a little idea of how the markets react on Friday when Trump said that he spoke with Vietnamese officials and that there was potentially an agreement in preparation for Vietnam.
The country has been affected by a price of 46% by the United States, which is a fairly significant level, and Vietnam said it could reduce all its prices on American products in this country to zero. Actions like Nike and Lululemon actually increase this news, because they are clothing companies that have a very great presence in Vietnam.
In general, I believe that we will see the markets drop, but you could see specific actions move in a more positive direction because there are indications that there may be authorized exemptions.
We do not know what Trump will allow – he sometimes sent great signals saying that his policies will never change, but have also suggested that certain transactions are possible.
