Strong week ahead of a new era 21/01/2025

HOT stories for today
 

Markets Eye Trump’s Second Term

• Donald Trump began his second term with executive orders targeting immigration and energy, including declaring national emergencies for the border and energy prices. Key actions include halting asylum access, reinstating “Remain in Mexico” policies, and revoking the EV mandate. Trade policies and potential tariffs are under review. Among the key policies being watched, tariffs are a significant concern. Proposals include a 25% tariff on goods from Mexico and Canada and a 10% tariff on Chinese imports, potentially adding $640 billion in costs to U.S. trade.
• These measures could hurt industries reliant on imports, spark inflation, and put upward pressure on interest rates. Deregulation is another focus, with plans to cut regulations in finance, energy, and manufacturing sectors. Banks, in particular, stand to benefit from reduced oversight, while looser environmental rules may boost energy companies. On taxes, Trump aims to extend and expand the 2017 corporate tax cuts, with potential reductions from 21% to 15%, which could bolster business profits and investor confidence. Investors will closely monitor announcements in the coming weeks. Significant economic changes take time, but early signs from the administration could drive market sentiment soon.

Stocks on the move:

• Robinhood (HOOD, +5%): Surged on a Bloomberg report indicating that President-elect Donald Trump plans to release an executive order to make cryptocurrency a ‘national priority’ to push federal agencies to collaborate with the industry.
• Novo Nordisk (NVO, -5%): The government named Ozempic among 15 drugs selected for the second round of Medicare price negotiations under the Inflation Reduction Act.
• Truist Financial (TFC, +5%): The regional lender’s fourth-quarter earnings beat estimates, with its net interest margin rising 12 bps YoY and net interest income increasing 1.8% YoY.
• Coinbase (COIN, +5%): Oppenheimer analysts see a buying opportunity in the stock after its 6% monthly decline and express an upbeat outlook about fourth-quarter results.

Today’s action

• Asia-Pacific markets advanced Tuesday as investors awaited more precise direction on U.S. President Donald Trump’s economic policies following his inauguration. Regional focus also shifted to central banks, with the Bank of Japan’s upcoming policy meeting on January 23–24, where Governor Kazuo Ueda has indicated potential rate hikes.
• In the U.S., stock futures faced mixed pressure. Futures tied to the S&P 500 rose 0.11%, and Dow Jones Industrial Average futures climbed 0.24%, while Nasdaq 100 futures were flat. However, while signing executive orders, futures turned lower after Trump suggested imposing 25% tariffs on Mexico and Canada starting February 1 over border concerns. On a positive note, Trump stated that universal tariffs are not being considered at this time. Elsewhere, Jefferies issued a rare downgrade for Apple to underperform, marking a cautious stance on the tech giant. Netflix is set to report earnings after the market closes, while no significant economic data is expected today.

Wahtclist: AAPL, MMM, COF, CVX, COIN, SCHW, PLD, DHI
 

Bitcoin
 

• According to Coin Metrics, Bitcoin reached a new all-time high of $109,350.72 early Monday before retreating by over 2% to $103,558.38. The pullback reflected a “buy the rumor, sell the news” reaction as traders digested President Donald Trump’s inauguration. Leading up to the event, optimism was high in the crypto community, with speculation that Trump might announce policies supportive of cryptocurrency, such as forming a crypto advisory council or establishing a national bitcoin reserve.
• The weekend saw further excitement with the “Official Trump” meme coin launch, which soared to a $10 billion market cap by Monday morning, according to CoinGecko. Adding to the frenzy, First Lady Melania Trump introduced her “Melania” coin on Sunday, generating $7.2 billion in trading volume within 24 hours. The broader crypto market saw a cooldown, with the CoinDesk 20 index declining 3.6% on Monday afternoon. Solana, a blockchain that hosted the Trump meme coin, led losses with a 9% drop after a strong 14% weekend rally. While Bitcoin and the broader market cooled, traders remain optimistic about potential regulatory shifts favoring cryptocurrency during Trump’s second term.
  Watchlist: Bitcoin: 89 000-109 000, Ethereum: 2900-3600, Solana: 220-296.5

Forex
 

• The Japanese Yen (JPY) strengthened against the U.S. Dollar (USD) for a second consecutive day on Tuesday, trading just below a one-month high. Fears of a global trade war, reignited by U.S. President Donald Trump’s tariff remarks, bolstered demand for the safe-haven JPY. Rising expectations for the Bank of Japan (BoJ) to announce another rate hike at its upcoming policy meeting further supported the Yen. However, a modest recovery in the USD from a two-week low helped cap USD/JPY losses.
• Meanwhile, EUR/USD remained under pressure, trading around 1.0380 in early Tuesday’s Asian session. The Euro continues to face headwinds as markets expect the European Central Bank (ECB) to adopt a more dovish stance. Anticipation of four consecutive 25-basis-point rate cuts reflects concerns about the Eurozone’s economic outlook and subdued inflationary pressures. The USD appreciated slightly on news of Trump’s plans to direct federal agencies to review tariff policies, while traders expect the Federal Reserve to maintain its current benchmark rate at 4.25%-4.50% during its January meeting. Both currency pairs highlight the global markets’ cautious tone amid geopolitical uncertainty and central bank policy shifts.
  Watchlist: EUR/USD: 1.0170-1.0500, USD/JPY: 154.7-159

Basic Materials
 

• Gold prices (XAU/USD) climbed for a second consecutive day, reaching $2,729, the highest level since November. The metal gained traction following U.S. President Donald Trump’s remarks on potential tariffs, prompting a flight to safety. Additionally, declining U.S. Treasury yields, driven by expectations of two Federal Reserve rate cuts this year, further supported the yellow metal—a modest recovery in the U.S. dollar and a slight improvement in risk appetite limited further gains.
• Meanwhile, West Texas Intermediate (WTI) crude oil slipped to $76.15 early Tuesday. Trump’s announcement of a national energy emergency, aimed at boosting U.S. crude production and streamlining approvals for energy projects, weighed on oil prices. However, upbeat Chinese economic data is expected to mitigate further losses, supporting the black gold. Traders are now closely monitoring Trump’s upcoming energy-related executive orders for additional market cues.
  Watchlist: GOLD 2500-2800, US Oil: 75.00-79.50

Key Economic Events Today:

EST time

05:00 am: EUR German ZEW Economic Sentiment
08:30 am: CAD CPI

BMO (Before the US Market opens)

SCHW        The Charles Schwab Corp.
PLD            Prologis Inc.
MMM          3M Company
DHI             D.R. Horton Inc.
FITB           Fifth Third Bancorp.

AMC (After the US Market closes): NFLX, COF, UAL, IBKR

The TEFS Analyst team wishes you a successful day!