LIVE MARKETS-Gearing down cruise mode: Scotiabank downgrades US equities after latest tariffs

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GEARING DOWN CRUISE MODE: SCOTIABANK DOWNGRADES US EQUITIES AFTER LATEST TARIFFS

Scotiabank has slashed U.S. equities to "underweight" from "overweight," citing President Trump's sweeping tariffs on key trading partners, which have sparked fears of a global recession.

"On the growth side, it's hard to envision the US economy continuing to cruise at a 3% pace on a go-forward basis; moderating growth is the most likely scenario from here," it said.

The brokerage also downgraded emerging markets equities to "underweight" from "neutral."

Scotiabank notes that many emerging market countries, including China, which faces cumulative tariffs exceeding 50%, may suffer due to low valuations and at-risk earnings expectations, compounded by a risk-off sentiment.

On the other hand, the brokerage upgraded Canadian equities to "overweight" from "underweight."

"The picture is different in Canada due to index composition, with gold miners/energy stocks spread out more styles and boosting earnings momentum", it added.

Canada avoided the new levies compliant with the USMCA trade agreement between the U.S., Mexico, and Canada and are largely exempt, except for autos, steel, and aluminum, which are subject to separate tariff policies.

(Joel Jose)

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