EM Stocks’ Trump Rally at Risk as Tariff Reality Kicks In (1)

The start of Donald Trump’s second presidency has matched his first term in proving a boon for emerging-market stocks, but the rally risks running out of steam given his trade and fiscal policies are also sinking corporate earnings.

The benchmark MSCI Emerging Markets Index has posted an advance every month from January through August this year, the first of Trump’s second term. That’s happened only twice before in the 37 years that investors have tracked emerging markets as an asset class: in 2017, also a Trump inaugural year, and in 1993, under Bill Clinton.

But the Trump bump ...