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Trump-driven volatility: “The market will get used to it”

Mar 6, 2025

Redacción Mapfre

A month and a half into Donald Trump’s presidency, markets have experienced increased volatility, which has intensified over the past week. However, these episodes will be short-lived, and at some point—likely in the near future—they will stabilize, according to Alberto Matellán, General Manager of La Financière Responsable.

For this stabilization to occur, one of two scenarios must unfold: either Trump changes his approach to international politics, or (more likely) the market adapts to his way of doing things, Matellán predicted in an interview this Wednesday.

“The market always ends up adapting to something new,” Matellán noted, adding that while it is still too early to predict when this might happen, “markets typically adjust within a matter of months.” One example is the war in Ukraine: after an initial period of shock, the market eventually normalized, adapting to the new reality.

Recent Wall Street sessions have seen a pullback in the tech sector, with the NASDAQ leading the decline. However, Matellán doesn’t expect a major correction happening in isolation from the broader market. “We could see tech underperform compared to other sectors, just as it outpaced them last year,” the economist said, adding that the market “seems to have fallen out of love” with tech stocks. Despite this, he stressed the importance of analyzing individual companies, as this environment makes active management even more crucial.

Is Germany headed for a shift?

Following the German elections, coalition talks are already in progress, with reports indicating they revolve around a proposed 500-billion-euro investment plan. According to the General Manager of LFR, this public spending alone would only provide a short-term boost to Germany’s currently sluggish economic growth. “Depending on how it’s done, it could either create further challenges or serve as a real solution,” Matellán explains. In his view, for the plan to be effective in the long term, it must focus on “rethinking and strengthening Germany’s economic structure,” much like similar initiatives in other EU countries.

The European Central Bank is set to meet on Thursday, and Matellán expects another rate cut, “followed by a period of relative stability.” He believes that, to some extent, the ECB’s message should remain “independent” of Trump’s influence. Instead of focusing on market volatility, the central bank should prioritize inflation forecasts above all, and economic growth projections.

High volatility in stock markets: why it happens and how to act

In recent weeks, international markets have faced their most challenging period since 2020. In a situation marked by surging volatility, emotions like fear take center stage in the minds of many investors, and market movements shift from linear to exponential. Such situations, although not frequent, do tend to recur periodically, and it’s important not to get swept up in the negative atmosphere or act impulsively with a short-term mindset, as the experts at MAPFRE remind us.

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