By Carolina MandlNEW YORK (Reuters) – Traders worldwide are foreseeing that tariffs and inflation will wield the most significant influence on global markets in 2025, leading them to brace for heightened volatility. A recent annual survey of institutional trading clients conducted by JPMorgan Chase unveiled these insights on Wednesday.
The bank’s findings revealed that 51% of the 4,233 respondents identified inflation and tariffs as the foremost potential developments expected to dominate the markets this year. In contrast, last year, inflation was a top concern for only 27% of the participants.
The ongoing trade tensions sparked by U.S. President Donald Trump’s tariff threats on foreign-imported goods, as well as targeted sectors or countries, have already triggered fluctuations in the markets this year. Notably, major stock indexes experienced declines following Trump’s announcement of substantial new tariffs on imports from Mexico, Canada, and China. However, they rebounded the next day when the president decided to postpone tariffs on Mexico and Canada.
Many market observers view the tariff policies as having an inflationary impact. Chi Nzelu, JPMorgan’s global head of fixed income, currencies, and commodities e-Trading, noted a surge in trading activity at the beginning of the week, as traders scrambled to rebalance their portfolios in response to significant movements in currencies like the Canadian dollar, the Mexican peso, and the offshore Chinese yuan.
Conversely, there is a diminished belief among traders that a potential recession could drive market movements this year, with only 7% expressing this concern compared to 18% in 2024.
When queried about the primary challenge anticipated in 2025, traders consistently highlighted volatility as a top issue, a continuation from 2024. This year, 41% of respondents pointed to volatility as the foremost challenge, a notable increase from the 28% who mentioned it in the previous year’s survey.
Eddie Wen, JPMorgan’s global head of digital markets, pointed out the unique aspect of this year’s volatility, attributing it to unexpected fluctuations triggered by news headlines surrounding the administration’s plans. This, in turn, has led to swift market reactions.
The bank’s e-Trading report also delved into traders’ concerns regarding market structure, with issues like liquidity access, regulatory changes, and market data access and costs taking center stage.
Among the noteworthy trends highlighted in the survey is the projected uptick in electronic trading across all traded products in the upcoming year, spanning from emerging market rates to commodities and credit spreads.
(Reporting by Carolina Mandl in New York; Editing by Mark Porter)
