Market Momentum Builds as Trump’s Presidency Takes Shape
The first three days of Donald Trump’s presidency have been nothing short of eventful, with Wall Street stocks hovering near record highs. As the dust settles, investors are shifting their focus to a packed corporate earnings season and crucial economic updates.
Tech-Led Rally Fuels Market Optimism
Wednesday’s tech-driven surge in U.S. equity indexes, fueled by Trump’s artificial intelligence investment plan and impressive Netflix results, saw the S&P 500 clock a new intraday record. Volatility gauges plummeted to their lowest levels this year, as stock index futures retreated slightly overnight. Treasury yields, meanwhile, ticked higher in the renewed “risk-on” environment.
Global Bond Sales See Robust Demand
A notable trend this week has been the strong demand for sovereign debt sales across developed markets. Investors have been snapping up bonds in Britain, France, and elsewhere, easing concerns about government funding. Benign inflation readings from the United States, Canada, and Europe have contributed to this trend, with the estimated “term premium” embedded in 10-year Treasuries slipping to its smallest level this year.
Trump’s Energy Push and Tariff Talks
Trump’s pro-drilling stance has led to a retreat in U.S. crude oil prices to two-week lows. The president’s declaration of a national energy emergency aims to reduce environmental restrictions on energy infrastructure and projects. Meanwhile, Trump’s tariff push remains a lingering concern, with potential new tariffs on China, the European Union, Canada, and Mexico still on the table.
Davos Takes Center Stage
All eyes will be on Trump’s virtual appearance at the World Economic Forum in Davos, where he is expected to address global leaders. The event will be closely watched, particularly in light of Trump’s recent sanctions threat against Russia.
Economic Updates and Earnings Ahead
Thursday brings a slew of economic updates, including weekly jobless claims numbers and the first sweep of January business surveys. The earnings diary is topped by Texas Instruments and General Electric, with markets bracing for next week’s updates from Big Tech megacaps.
Global Markets React
Chinese stocks saw a modest uptick after Beijing announced measures to bolster the market, although tariff threats limited gains. In Europe, stocks retained much of their gains to new records, with another European Central Bank interest rate cut expected next week. The dollar traded in narrow ranges against major peers, while Japan’s yen remained flat ahead of a potential Bank of Japan hike on Friday.
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