In global markets, the return of the U.S. President to the White House has evoked mixed reactions, with investors grappling to anticipate the trajectory of the next four years. Senior portfolio manager Russel Matthews from RBC BlueBay Asset Management characterized the forthcoming approach as "chaotic, unpredictable, spur of the moment and driven by Trump himself."
Following Trump's inauguration speech, certain countries identified as potential targets for tariffs experienced a decline in their currencies. Fidelity International's multi-asset manager Becky Qin cautioned against investments in Mexican peso or other tariff-exposed currencies due to the "binary" nature and high policy uncertainty involved.
Goldman Sachs strategists projected a 70% chance of Trump imposing 20% tariffs on China, though the likelihood of 25% import levies on Canada and Mexico seemed low. The market reacted with strength towards the U.S. dollar compared to the Canadian currency, affecting trade dynamics.
European currencies, such as the euro and sterling, initially rallied after Trump refrained from immediate tariff impositions. However, subsequent declines hinted at the transient nature of the relief. Market analysts speculated on the impact of potential mentions of Europe in Trump's future tariff discussions.
European equities surged in January after a period of pessimism surrounding economic growth and tariff threats. Big investors showed increased interest in European stocks, navigating the risks posed by U.S. policy changes.
Despite concerns over U.S. policy uncertainties, Citi economists predicted a 1% increase in euro area economic growth, supported by ECB rate adjustments and consumer spending. European stocks experienced fluctuations based on their exposure to U.S. trade policies, affecting companies like automakers Stellantis, Volkswagen, and BMW.
Trump's initiatives in increasing U.S. oil and gas production triggered fluctuations in oil prices, impacting U.S. crude futures and Brent crude values. The U.S., a significant player in the global oil market, faced competition from OPEC+ countries seeking to adjust supply levels amidst global demand concerns.
Cryptocurrencies, which soared post-Trump's election win, faced a setback as his initial policies omitted references to the digital asset class. Bitcoin retreated from a record high, responding to Trump's own cryptocurrency launch and the absence of anticipated shifts in U.S. crypto regulations, prompting market analysis and reactions.