US stock futures rose after bouncing around yesterday as traders digested Trump’s statements on economic policy and trade levies, while European equities eked out small gains.
The Mexican peso and Canadian dollar tumbled yesterday night – reversing sharp gains from earlier in the day – after Trump said he was mulling imposing 25% tariffs on the neighbouring countries as soon as Feb 1.
That sent the Mexican peso sliding 1.3% against the US dollar while the Canadian dollar tumbled to a five-year low of US$0.689.
Around 11 hours earlier the US dollar had plunged against its peers after a presidential memo, first reported by the Wall Street Journal, said the administration would probe trade issues but stop short of day-one tariffs.
The dollar index, which measures the currency against six peers, was last up 0.64% at 108.69 today, although failed to make back the 1.2% it lost yesterday in its biggest daily fall since November 2023.
“The first few hours of the Trump administration have underscored that the policy environment will be dynamic once again and markets should brace for volatility,” said Charu Chanana, Saxo’s chief investment strategist.
“Clearly, the markets celebrated too soon with tariff threats missing at the outset in Trump’s inaugural speech,” she said.
The euro was last down 0.62% at US$1.0353, after rallying 1.4% today amid the relief about a delay in tariffs.
Sterling was 0.67% lower at US$1.2248 after jumping 1.3% the previous day.
Trump also said he wanted to reverse the US trade deficit with the EU, either with tariffs or more energy exports.
Europe’s continent-wide STOXX 600 index was 0.16% higher but Germany’s DAX was down 0.1%.
US stock futures rallied after struggling in early trading, leaving Nasdaq futures 0.56% higher and S&P 500 futures up 0.49%.
European carmakers slipped around 0.4% today after Trump revoked a 2021 executive order signed by his predecessor that sought to ensure half of all new vehicles sold in the US by 2030 were electric.
Trump tempest
The dollar has risen around 5% since Trump won the Nov 5 election, partly because the US economy has remained strong and partly as investors have braced for wide-ranging tariffs that would likely hurt America’s trading partners.
Many investors had expected early action on tariffs, hence the big moves sparked by the memo indicating no immediate action.
US Treasury yields were down 4 basis points today at 4.57%, after reopening for trading after a public holiday.
The yields, which set the tone for borrowing costs around the world, are nonetheless up almost a percentage point since the Federal Reserve (Fed) slashed rates by 50 bps in September, reflecting an economy that has continued to grow strongly.
Chinese stocks were volatile but ended higher as Trump largely steered clear of definitive threats against the country’s exports, with the CSI 300 index up 0.1%.
Trump warned he could impose tariffs on China if Beijing failed to approve a US deal to be a half-owner of short-video app TikTok.
“At some point, we are quite certain that Trump will start to move on the tariff measures,” Khoon Goh, head of Asia research at ANZ, said of tariffs more broadly.
“The fact that he hasn’t addressed this on day one doesn’t mean that it is off the agenda. It is definitely firmly on the agenda, it’s just that we have to wait and see what shape or form he takes,” Goh said.
Elsewhere, Trump’s new crypto token gave up some of its strong gains yesterday to fall 20% to US$35.27, after having soared to more than US$10 billion in market value at the start of the week.