As Donald Trump prepares to take the presidential oath for a historic non-consecutive second term, financial markets are poised for potential shifts.
Investors are reflecting on the economic and market dynamics during his first term to anticipate what might lie ahead.
With US markets closed for Martin Luther King Jr. Day, global attention turns to foreign exchange markets and stock and bond futures for initial reactions. Trump’s return has prompted questions about whether his bold policy proposals and unpredictability will reignite market volatility.
The US dollar has recently reached multi-year highs, driven by strong economic data and investor expectations. However, early Monday trading saw the greenback soften as markets adopt a wait-and-see approach. Speculation is rife about the implications of potential tariff policies and executive orders on currency trends.
US stock markets concluded their first winning week of 2025 last Friday, with the S&P 500, Dow Jones, and Nasdaq all posting strong gains. Financials led the charge, buoyed by robust earnings from major banks. Similarly, Treasury yields eased following softer inflation data, providing support to equities.
Markets are watching closely as Trump is expected to sign a flurry of executive orders immediately upon taking office. His stated priorities include energy policy shifts, tax cuts, and regulatory rollbacks, all of which could shape market sentiment. His stance on cryptocurrencies and tariffs, as well as his interactions with China, will also be pivotal in the coming weeks.
While US investors await the reopening of domestic markets on Tuesday, global markets and cryptocurrencies remain active. Bitcoin, which surged on speculation of a pro-crypto Trump administration, saw some pullback but remains a key focus for investors eyeing digital assets.
With input from Reuters, CNBC, and Investor’s Business Daily.
