Investors were preparing to welcome the second inauguration of Donald Trump, anticipating the gains from his pro-business agenda, although remaining cautious about their protectionist trade policies, particularly his stance on tariffs.
Trump takes office with a ambitious agenda that encompasses trade reform, clampdown on immigration, tax cuts, and a loosening of cryptocurrency regulation. The Investment managers are adjusting portfolios across asset classesattentive to his inaugural speech in search of signals that could trigger short-term market movements.
“Uncertainty remains the watchword, with everyone watching for answers to questions such as whether the threat of tariffs will become a reality or will remain a day one trading strategy,” said Sam Stovall, chief market strategist at CFRA Research. .
But many maintain hope for a relatively moderate response to the new president’s initial comments and actions.
“Trump’s bark could be worse than Trump’s bite at the beginning,” said Michael Arone, chief investment officer at State Street Global Advisors. He expects the timing and impact of Trump’s most significant policy changes to unfold over a longer period of time.
Risks that could affect investments
Even so, there is the Potential that Trump’s tariff plans will further stoke inflation fears which pressure bond and stock prices, while efforts to tighten immigration controls also could impact those markets. Moves to relax regulation have lifted bank stocks and sent cryptocurrencies soaring.
While reporting rising profits, Wall Street CEOs told investors that the next U.S. administration It would be pro-business and good for the banks.
“Investors have been enthusiastic about the possible relaxation of regulations and the possible reduction of corporate tax and corporate income tax,” says Stovall. The S&P 500’s post-election rally has cooled to 2.7%, following a sell-off in early January on inflation fears.
Trump plans to begin his presidency with a flurry of executive orders targeting key policy areas such as immigration and energy. The cryptocurrency sector hopes that Trump will fulfill his “crypto president” campaign promises by creating a federal reserve of bitcoins, expanding access to banks and creating a cryptocurrency council, Reuters previously reported.
During the first year of the first Trump Administration, andThe S&P 500 rose 19.4%, after a 5% rally in its first 100 days in the Oval Office. Throughout Trump’s first term, the S&P 500 rose nearly 68%, but markets suffered bouts of volatility, stemming in part from the trade war Trump waged with China.
After Trump’s inauguration speech in his first term, in January 2017, the S&P 500 finished up 0.3% on the day. lU.S. stock and bond markets are closed on Monday for Martin Luther King Jr. Day, so much of the trading reaction may not be evident until Tuesday.
Source: Ambito
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