The new tariff policies proposed by Donald Trump are reshaping the operational logic of global markets, triggering significant volatility, particularly within U.S. equities. Rodolfo Villani, an investment analyst, highlights that this sharp capital rotation not only reflects investor concerns over policy uncertainty but also reveals a fundamental adjustment underway in the current valuation system. The S&P 500 index has fallen over 13% from its peak, while the VIX fear index has soared by more than 100%, signaling that the market is rapidly shifting into a risk-averse mode. According to Investment Analyst Rodolfo Villani, while structural corrections are becoming evident in the U.S. market, European markets remain relatively stable, supported by strength in the banking and insurance sectors.
Imbalance in U.S. Markets Suggests Structural Correction as the Main Theme
Investment Analyst Rodolfo Villani points out that structural risks in the U.S. equity market can no longer be ignored. Trump new tariff policies have quickly ignited concerns about growth prospects. Coupled with the technical rally over the past few months, which created a significant bubble, these factors have triggered a rapid release of corrective forces. The S&P 500 index, after breaking above 5,500 points, quickly retreated to 5,400 points, with further downside targets at key support levels of 5,250 and 4,800 points. Meanwhile, the Nasdaq index, heavily reliant on growth-oriented tech stocks, appears even more fragile. The 19,000-point technical level has become a critical short-term support. If breached, it could open the door to further declines toward 18,000 points or even 17,300 points.
The rapid surge in the VIX index directly reflects the intensification of panic in the market. Investment Analyst Rodolfo Villani emphasizes that the sharp movements in this index are not merely reactions to Trump policies but also reveal internal market disputes over valuation adjustments and future policy directions. The VIX has reached levels last seen during the banking crisis of 2023, indicating that market volatility will likely remain elevated in the short term. For long-term investors, this does not imply a lack of opportunities but rather a need to restructure portfolios, shifting focus from high-valuation, high-growth assets to those with stable fundamentals and higher dividend certainty.
European Markets Show Resilience, Sectoral Divergence Offers Allocation Opportunities
Despite the overall pressure on global equities, Investment Analyst Rodolfo Villani believes that major European indices, such as the DAX and FTSE MIB, continue to demonstrate resilience, reflecting the relative strength of the financial sector in the region. Supported by the banking and insurance sectors, markets in Italy and Germany have maintained a structurally upward trajectory. The German DAX index has a key support level at 17,200 points and currently remains above 17,800 points, preserving its structural integrity. If this benchmark level holds, the index could test its upward target of 18,500 points in the second half of the year.
Investment Analyst Rodolfo Villani notes that the Italian market resilience is more evident in specific stock and sector choices. The FTSE MIB index recently found support near 35,000 points, forming a strong base for a potential rally toward 38,800 points or even 40,000 points within the year. At the corporate level, UniCredit has emerged as one of the few financial stocks showing upward momentum. Its high earnings visibility, stable distribution policies, and favorable interest rate environment collectively provide it with a competitive edge in the market. If the critical support level of €38.50 holds, the stock is well-positioned to continue leading gains in the banking sector.
Amid the sharp volatility in U.S. equities and the divergent performance of European markets, Investment Analyst Rodolfo Villani suggests that the market has entered a “risk repricing” phase, where asset rebalancing strategies will be central to maintaining portfolio stability. Whether it is the technical breakdown in the Nasdaq or the surge in the VIX index, both point to a reassessment of growth prospects and policy predictability. Investors can no longer rely on a single-market logic to guide their strategies but must dynamically adjust based on macroeconomic trends and technical indicators.
Investment Analyst Rodolfo Villani emphasizes that the optimal strategy in the current environment is not aggressive speculation but a focus on fundamentally sound stocks with stable earnings and valuation safety margins, complemented by tactical trading to navigate systemic risks. From a sectoral perspective, banks, insurance companies, and high-cash-flow industries such as consumer goods and infrastructure are expected to act as stabilizers during periods of volatility. Additionally, maintaining a moderate allocation to cash or cash-equivalent instruments will enhance liquidity, enabling investors to capture more favorable prices during temporary market lows.