Investing.com — Market Reactions to Trump’s Inauguration

Global investors are set to gauge the impact of President-elect Donald Trump’s return to the White House. His inauguration on Monday as the 47th U.S. president is anticipated to prompt a series of executive orders affecting taxes and tariffs, coinciding with the commencement of the fourth-quarter earnings season. Here’s a look at the week ahead in the markets.

Trump Inauguration

Investors are attentively observing as Trump prepares for his second term on Monday, where he intends to sign multiple executive orders on his first day.

The markets will be closed on Monday in observance of Martin Luther King Jr. Day, meaning any potential market reactions may not be felt until Tuesday. Tariff-related changes are likely to be in the spotlight, especially with the market having been unsettled by leaks and denials since the election. In anticipation of Trump’s proposed tariffs inciting inflation, long-dated U.S. bond yields have increased.

Earnings

As investors look forward to a year bolstered by U.S. corporate profits, several companies are scheduled to report their fourth-quarter earnings this week. Key reports include streaming giant Netflix (NASDAQ:NFLX), healthcare leader Johnson & Johnson (NYSE:JNJ), consumer goods powerhouse Procter & Gamble (NYSE:PG), and credit card issuer American Express (NYSE:AXP).

Earnings season commenced last week, with major banks posting higher profits driven by increased deal-making and robust trading revenues. Analysts expect S&P 500 companies to exhibit a 10.4% year-over-year increase in fourth-quarter earnings, according to LSEG IBES data as of January 15.

Davos

Global leaders in government and business will convene at the World Economic Forum in Davos, Switzerland, starting Monday. A recent survey revealed armed conflict as the most significant risk to the global economy in 2025, followed by extreme weather.

Trump will address the meeting via video link on Wednesday, while Ukraine’s President Volodymyr Zelenskiy will speak on Monday. Other notable attendees include European Central Bank President Christine Lagarde and European Commission President Ursula von der Leyen.

BOJ Hike?

The Bank of Japan is scheduled for its first policy meeting of the year on Thursday and Friday. Ahead of this meeting, BOJ officials have hinted at a possible rate hike, led by Governor Kazuo Ueda and Deputy Ryozo Himino, who stated that the borrowing cost decision will be reconsidered.

In light of Trump’s policies, this decision may influence financial markets. A rate hike could narrow the interest gap between Japan and the U.S., potentially supporting the yen, which has hovered around the 160 mark against the dollar, prompting BOJ intervention.

Oil Prices

Brent crude futures rose by 1.3% last week while U.S. West Texas Intermediate crude futures increased by 1.7%. Recent U.S. sanctions on Russia’s energy sector have intensified supply disruption fears, contributing to a 10% rise in oil prices this month.

Additionally, market participants are assessing the impact of Trump’s return, especially with his nominee for Treasury Secretary indicating readiness for tougher sanctions on Russian oil.

A surge of Arctic air has enveloped much of the U.S., leading to a significant drop in temperatures, which is expected to escalate heating oil demand by mid-week.