Stocks and Bitcoin Gain Before Trump Takes Office: Markets Wrap
(Bloomberg) — European stocks edged higher along with US equity futures, while the dollar weakened ahead of Donald Trump’s inauguration. Bitcoin soared to a record.
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Trump is expected to unleash a barrage of executive orders on his first day in office, including decrees on immigration, tariffs and energy, as part of a sweeping effort to quickly implement his policy agenda upon taking office. While many investors expect those interventions to be business-friendly, they’ll also introduce a note of unpredictability.
“One thing is 100% certain: Trump wants to keep the US stock markets in a good mood,” said Dana Malas, a strategist at SEB. “There will be a strong growth- and business-focused policy (for the US), with inflationary elements, and expect abrupt shifts under the motto that agreements are there to be broken.”
Even before taking office, Trump is moving markets. His plan to invoke emergency powers in order to boost domestic energy production, while shifting away from renewable sources, sparked declines in Siemens Energy AG, Enel SpA and Vestas Wind Systems A/S.
Bitcoin jumped as much as 5.5% after the president-elect and his wife Melania unveiled their own memecoins over the weekend. Trump’s conversation with China’s leader Xi Jinping — which he described as “very good” — boosted Asian stocks on Monday.
The Stoxx Europe 600 index added about 0.1%, led by technology stocks. Futures and the S&P 500 and Nasdaq 100 were little changed, with Wall Street closed Monday for a holiday. A gauge of the dollar slipped for the first time in three days, though it remains close to the 13-month high it reached earlier this month.
The potential for Trump to unleash additional fiscal stimulus, from lower taxes to higher tariffs, may keep the dollar strong and Treasury yields elevated. For one, Nomura Holdings Inc. has joined T. Rowe Price in seeing a chance of 10-year Treasury yields rising to 6% this year, while a small group of bond traders believe the Federal Reserve’s next move on interest rates will be to increase them, contrary to the majority view that rates will be cut.
“Any further stimulus that sparks a growth and inflation shock could lead to a Fed rate hiking cycle, for which markets are largely unprepared,” Iain Stealey, international CIO for fixed income at J.P. Morgan Asset Management, wrote in a note to clients.
Trump’s stance on issues including the tech rivalry with China and climate change also will likely affect investment decisions on sectors from semiconductors to electric vehicles, and shipbuilding.
The stronger appetite for risk assets in Asia came after Trump and Xi discussed trade, TikTok and fentanyl, which may set the tone for relations in the early days of the new administration. Adding to the brighter mood, TikTok started restoring service in the US on Sunday as Trump said he would halt enforcement of a law requiring the app’s Chinese owner to find a buyer for three months.
Chinese Vice President Han Zheng met billionaire Elon Musk and other US business figures, underscoring Beijing’s efforts to strengthen ties with the US before Trump’s return.
The World Economic Forum’s annual meeting gets underway later Monday. Among the group of billionaires set to join the pilgrimage of the rich and powerful to Davos, Switzerland are Larry Fink, Ray Dalio and Marc Benioff. Trump will speak virtually to the gathering three days after his inauguration.
Later in the week, the focus will shift toward the Bank of Japan’s scheduled policy decision on Friday, with about three quarters of economists in a Bloomberg survey expecting it to hike its key rate.
Key events this week:
The annual World Economic Forum in Davos begins, Monday
Donald Trump to be sworn in as 47th president of US, Monday
UK jobless claims, unemployment, Tuesday
Canada CPI, Tuesday
New Zealand CPI, Wednesday
Malaysia CPI, rate decision, Wednesday
South Africa retail sales, CPI, Wednesday
ECB President Christine Lagarde and other officials speak at Davos, Wednesday
South Korea GDP, Thursday
Eurozone consumer confidence, Thursday
Turkey rate decision, Thursday
Norway rate decision, Thursday
Canada retail sales, Thursday
Trump will join the World Economic Forum for an online “dialogue”
Japan CPI, rate decision, Friday
India, euro area, UK PMIs, Friday
ECB President Christine Lagarde and BlackRock CEO Larry Fink speak at Davos, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.1% as of 9:26 a.m. London time
S&P 500 futures were little changed
Nasdaq 100 futures rose 0.1%
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index rose 1%
The MSCI Emerging Markets Index rose 0.9%
Currencies
The Bloomberg Dollar Spot Index fell 0.1%
The euro rose 0.3% to $1.0308
The Japanese yen was little changed at 156.29 per dollar
The offshore yuan rose 0.2% to 7.3260 per dollar
The British pound was little changed at $1.2178
Cryptocurrencies
Bitcoin rose 4.3% to $107,991.4
Ether rose 4.4% to $3,372
Bonds
The yield on 10-year Treasuries was little changed at 4.63%
Germany’s 10-year yield was little changed at 2.53%
Britain’s 10-year yield advanced two basis points to 4.68%
Commodities
Brent crude fell 0.3% to $80.52 a barrel
Spot gold rose 0.1% to $2,706.52 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess, Julien Ponthus, Margaryta Kirakosian and Catherine Bosley.
