Stock Market Calms as Investors Focus on Economic Growth Prospects

After a volatile first day under President Donald Trump's second term, markets have settled into a more subdued mood. Investors are now looking past the threat of tariffs and instead focusing on the potential economic boost from fiscal stimulus and tax cuts.

US Market Performance

* S&P 500 and Nasdaq 100 futures rose by around 0.5%.
* Bloomberg's dollar gauge gained 0.6%.
* Treasury 10-year yields dropped four basis points to 4.58%.

Lack of Clarity on Tariffs Raises Volatility Risk

Despite the lack of immediate tariff impositions on day one, President Trump's executive orders indicate that he intends to address unfair trade practices globally. While this could potentially benefit certain domestic industries, it also introduces an element of uncertainty and potential volatility across financial markets.

Fourth-Quarter Earnings Season Resumes

Major US companies such as 3M Co., Netflix Inc., and United Airlines Holdings Inc. are scheduled to report earnings on Tuesday. Investors will be paying close attention to corporate guidance and insights into the economic landscape.

Impact on Foreign Currencies

President Trump's threats of tariffs on Canadian and Mexican imports have triggered sharp declines in the Mexican peso and Canadian dollar, making them among the worst-performing major currencies.

Investor Perspectives

* Mohit Kumar, Chief Economist at Jefferies International Ltd.: "Risky assets should benefit from deregulation and tariffs emerging as not so bad as feared."
* Benoit Peloille, Chief Investment Officer at Natixis Wealth Management: "If Europe is not specifically targeted, we see upside potential for European stocks."
* Gilles Guibout, Head of European Equities at AXA IM: "The muted reaction in European markets indicates that the announcements were less severe than expected."
* Robert Dishner, Senior Portfolio Manager at Neuberger Berman: "The fears are sometimes greater than reality. Markets will eventually settle into a cadence of the domestic agenda."

Upcoming Key Events

* UK jobless claims and unemployment data (Tuesday)
* Canadian CPI (Tuesday)
* World Economic Forum meeting in Davos (Wednesday-Friday)
* South Korea GDP (Thursday)
* Eurozone consumer confidence (Thursday)
* ECB President Christine Lagarde's online "dialogue" at the World Economic Forum (Friday)
* Japan CPI and rate decision (Friday)
* India, Euro Area, and UK PMI data (Friday)