US Market Tumult: Trade Tensions Spark Sell-Off; DBS Group Delivers Record Profits and Dividend

The US stock market experienced a roller coaster ride on Monday, February 3, 2025, as investors grappled with the fallout from President Trump's announcement of steep new tariffs on imports from Canada, Mexico, and China. The Standard & Poor's 500 index ended up falling 0.8%, while the Dow Jones Industrial Average lost 0.3%, and the Nasdaq composite sank 1.2%. The market had been on track for a much worse loss at the start of trading, with the S&P 500 briefly down nearly 2% and the Dow dropping as many as 665 points.



The fear hanging over Wall Street was that Trump's tariffs could push up prices for groceries, electronics, and other goods for US households, adding upward pressure on a US inflation rate that had been slowing since its peak three summers ago. Stubbornly high or accelerating inflation could keep the Federal Reserve from cutting interest rates, which it began doing in September to give the US economy a boost. Profits for US companies could also face downward pressure from slowing global trade.

However, the losses moderated after Mexican President Claudia Sheinbaum said tariffs on her country's goods are on hold for a month following a conversation with Trump. The Dow even turned briefly higher in the afternoon for a small gain. After the US stock market closed for the day, Canadian Prime Minister Justin Trudeau said a conversation he had with Trump also led to a 30-day pause.

The ultimate fear haunting Wall Street is that Trump's tariffs could spark a trade war that could crimp corporate profits and dampen consumer spending. This development came sooner than many economists anticipated in their baseline forecasts and will lead them to downgrade their 2025 global forecast. The latest set of tariffs will lead to weaker GDP growth, higher unemployment, higher interest rates, and higher inflation this year in Canada, Mexico, and the US than in their January baseline forecast.

In contrast to the market turmoil, DBS Group, a leading financial institution in Asia, announced record profits and a dividend increase for the full year 2024. The bank's net profit rose 11% to SGD 11.4 billion, with return on equity at 18.0%. Total income grew 10% to SGD 22.3 billion, driven by a 10% increase in net interest income and a 23% rise in net fee income. The cost-income ratio was unchanged at 40%, and asset quality remained sound with specific allowances at 13 basis points of loans.



The Board proposed a final dividend of 60 cents per share for the fourth quarter, an increase of six cents from the previous payout. This brings the ordinary dividend for the financial full year to SGD 2.22 per share or SGD 6.31 billion, an increase of 27% over the previous year. In addition, the Board committed to managing down the stock of excess capital over the coming three years by introducing a Capital Return dividend of 15 cents per share per quarter to be paid out over financial year 2025.

DBS Group's strong performance aligns with an investment philosophy focusing on fundamentals and quality stocks. The bank's record profits, dividend growth, capital management, strong asset quality, and growth in key metrics demonstrate a strong financial position and commitment to returning value to shareholders. Investors focused on these factors may want to consider adding DBS Group to their portfolios.

In conclusion, while the US stock market grapples with the fallout from President Trump's tariffs, DBS Group's record profits and dividend announcement offer a beacon of stability and growth. Investors should stay informed about the evolving trade tensions and consider diversifying their portfolios to include quality stocks like DBS Group to mitigate potential risks.