Relief over Trump's Tariffs Suspension Buoys US Equity Futures
On Monday, the imminent inauguration of Donald Trump lifted US equity futures, with the dollar experiencing a decline.
Trump's decision to postpone China-specific tariffs on his inaugural day provided optimism. The S&P 500 contracts climbed 0.4%, while the dollar gauge plunged approximately 1%.
According to insiders, the new administration has shifted its stance towards Beijing, favoring potential engagement. Trump plans to issue a memorandum directing agencies to review existing trade relations with China, Canada, and Mexico.
Strategist Marvin Loh expressed hope that Trump would moderate his protectionist rhetoric. Volatility and uncertainty characterized the day's trading activity in equity futures and currencies, reflecting the anticipation of future market gyrations.
The market welcomed Trump's pledge to promote domestic growth through tax cuts and spending, which could potentially support the dollar and raise Treasury yields. Despite the majority view that interest rates will be reduced, Nomura Holdings and T. Rowe Price now anticipate that 10-year Treasury yields may reach 6%.
The Mexican peso initially gained, but lost ground following Trump's vow to declare a southern border emergency. Moreover, his intention to bolster domestic energy production led to declines in renewable energy stocks.
Bitcoin surged to a new record, buoyed by the release of Trump-themed memecoins.
Wall Street Reactions to Trump's Inauguration
* Steve Chiavarone: The market generally views Trump's agenda as growth-oriented. Tariff policy was a key focus, and the lack of new developments contributed to the weaker dollar and higher markets.
* Steve Sosnick: The dollar's weakness reflects reports of reduced tariffs, benefiting multinational stocks. Cryptocurrency prices eased after Trump's speech, possibly due to insufficient recognition.
* John McClain: Headlines will likely drive aggressive trading in the coming days. Patient investors should capitalize on market sentiment fluctuations.
Upcoming Key Economic Events
* Annual World Economic Forum in Davos (Monday)
* UK unemployment data (Tuesday)
* Canada CPI (Tuesday)
* South Africa retail and CPI data (Wednesday)
* ECB President Christine Lagarde's speech at Davos (Wednesday)
* Trump's online "dialogue" at Davos (Thursday)
* Eurozone consumer confidence survey (Thursday)
Market Highlights
* Stocks: S&P 500 futures up 0.4%, Dow Jones futures up 0.4%, MSCI World Index up 0.3%
* Currencies: Bloomberg Dollar Spot Index down 0.9%, euro up 1.2%, British pound up 1.1%
* Cryptocurrencies: Bitcoin down 0.3%, Ether up 3.4%
* Bonds: 10-year Treasury yield unchanged at 4.63%
* Commodities: WTI crude down 1.2%, spot gold up 0.2%