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51% of traders cite inflation and tariffs as top market

concerns

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Trump's tariff threats caused market volatility, impacting

currencies

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Volatility seen as biggest challenge, unexpected timing

noted by

traders

By Carolina Mandl

NEW YORK, Feb 5 (Reuters) - Traders across the globe

project that tariffs and inflation will have the biggest impact

on global markets in 2025 as they brace for volatility, an

annual survey of institutional trading clients by JPMorgan Chase ( JPM )

showed on Wednesday.

The bank said 51% of its 4,233 respondents named inflation

and tariffs together as the top potential developments likely to

dominate markets this year. Last year, inflation was also a top

concern, but only for 27% of the interviewees.

U.S. President Donald Trump's threats to impose tariffs on

foreign-imported goods and others aimed at specific sectors or

countries already have whipsawed markets this year.

Major stock indexes fell on Monday after Trump announced on

Saturday hefty new tariffs of 25% on imports from Mexico and

Canada, and 10% on China. The following day, they rose after the

president delayed tariffs on Mexico and Canada.

Many market participants see the tariff policy as

inflationary.

"At the beginning of the week, we saw traders engaging in

significantly more activity, attempting to rebalance their

portfolios due to movements of 1 to 2 percent in individual

currencies such as the Canadian dollar, the Mexican peso, and

the offshore Chinese yuan," said Chi Nzelu, global head of fixed

income, currencies and commodities e-Trading at JPMorgan ( JPM ).

On the flip side, fewer traders believe that a potential

recession could move markets this year: 7% versus 18% in 2024.

When asked about the biggest challenge in 2025, volatility

was the topic most mentioned by the traders, repeating a 2024

concern. This year, 41% of respondents cited it as the top

challenge, while 28% of the respondents mentioned it in the 2024

survey.

"What distinguishes this year is the somewhat unexpected

timing of volatility. Unlike in the past, when volatility was

tied to scheduled events like elections or nonfarm payroll data,

we're seeing more sudden fluctuations in response to news

headlines around the administration's plans, leading to

knee-jerk reactions in the marketplace," said Eddie Wen, global

head of digital markets at JPMorgan ( JPM ).

JPMorgan's ( JPM ) e-Trading report also asked traders about their

biggest concerns in terms of market structure, with access to

liquidity, regulatory change and market data access and costs

leading the pack.

Among the trends captured by the bank's survey is the

increase of electronic trading, which traders predict will

increase among all products traded next year, from emerging

market rates to commodities and credit spread.