Donald Trump wasted no time in making policy announcements after his inauguration, catching financial markets off guard. While he seemed lenient on China initially, he warned of possible 25% tariffs on Mexico and Canada starting next month.
The currency markets reacted differently, with China seeing relief, but Mexico and Canada experiencing a decline due to Trump's remarks. Trump hinted at universal tariffs but deemed the U.S. unprepared for such a move.
During his inauguration, the dollar fluctuated and eventually rose against the Canadian dollar, affecting the euro and pound. Trump's aim to reduce the U.S. trade deficit with the EU added to market uncertainty.
Nigel Green of deVere financial advisory group highlighted the potential impact of tariffs on Mexico and Canada, given their significant trade volume with the U.S. Wall Street's response was yet to unfold due to a holiday, but futures markets suggested a positive start.
Trump's reversal of green policies and exit from the Paris climate accord affected Asian markets, hinting at the unpredictable nature of his decisions. Despite concerns, some investors viewed the situation optimistically, seeing opportunities in uncertainty and volatility.
Trump's plan to impose high tariffs on goods from China was met with research requests on trade deficits instead. Market reactions varied, with the dollar reaching a five-year high against the Canadian dollar.
As Trump embarks on his agenda involving trade, tax cuts, and deregulation, investors anticipate potential boosts in corporate profits but remain cautious about inflation and interest rate adjustments by the Fed.
Cryptocurrency markets stalled post-inauguration, as Trump's actions did not directly impact them. The S&P 500 performance during Trump's first term reflected volatility, influenced in part by the U.S.-China trade war.
Investors are eager to understand the details of Trump's financial plans and their implications. Josh Strange from Good Life Financial Advisors of NoVA emphasized the importance of clarity on cost-cutting, inflation management, and interest rate policies.