| President Donald Trump said he planned to impose tariffs of as much as 25% on Mexico and Canada by Feb. 1, threatening to set off a trade wa |
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| Markets Snapshot | | | | Market data as of 06:41 am EST. | View or Create your Watchlist | | | Market data may be delayed depending on provider agreements. | | |
Five things you need to know | |
- President Donald Trump said he planned to impose tariffs of as much as 25% on Mexico and Canada by Feb. 1, threatening to set off a trade war with America's neighbors. The dollar index rose 0.5%. The Canadian dollar and Mexican peso slid more than 0.8% against the greenback.
- Trump also promised to unleash American energy development and revoked measures that had effectively blocked drilling in most US coastal waters. Oil prices fell, with West Texas Intermediate sliding below $77 a barrel.
- In a barrage of other first-day moves, Trump temporarily halted a ban on TikTok in the US, rescinded regulation on artificial intelligence, ordered an exit of the Paris climate accord and World Health Organization. Here's a rundown of the executive actions announced so far.
- Apple shares slide 1% in early trading. China iPhone sales dived 18% during the December quarter, according to independent research, a major setback for the company in its biggest market after the US.
- UK bond dealers want the government to sell fewer long-dated gilts next year in the wake of a surge in borrowing costs that took yields to the highest since 1998.
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| Under Donald Trump's presidency, investors are only ever a moment away from being sent spinning in another direction. (JPMorgan has even set up a "war room" that's working overtime to keep track of all the policy shifts.) Markets, particularly the dollar, have been swinging as traders guess again at whether Trump's tariffs threats are real or more bluster. According to Mark Cudmore of Bloomberg's Markets Live, the key takeaway from the past 24 hours is less focus on China. He writes: "Aggressive trade disruption with China is definitely much less likely on an imminent basis than had been expected by markets," he says. "The initial actions suggest Trump's tariff bark is worse than his bite."
In his view, that means a few things for markets: - Tariffs most directly impact FX markets, at least in theory, so the dollar has more downside. Combined with lower yields, that means an easing of financial conditions for much of the world.
- In stocks, China and Hong Kong have the most to gain because they have large discounts due to fears of an all-out trade war. That's generally positive for emerging markets, with Mexico a notable exception.
 WATCH: Goldman Sachs' Chief China Equity Strategist Kinger Lau discusses the potential impact of Trump's tariff policy on China. Others warn that it's too early to conclude that Trump will go any easier on China. Ronald Temple, chief market strategist for Lazard's Financial Advisory and Asset Management businesses, is reluctant to buy those stocks. "The actual announcement of tariffs will probably give you a selloff in Chinese equities and maybe more broadly EM equities," he said.
Rather than announce China-specific tariffs, Trump has instead ordered his administration to address unfair trade practices globally and investigate whether Beijing had complied with a deal signed during his first term. A fact sheet from the new US administration that is yet to be made public has also called for key federal agencies to address foreign-exchange manipulation by other countries, prompting a debate among market strategists.
Still, it's hard not to wonder if the winds have shifted a little. Hopes for an easing of tensions have been rising following a phone call between Trump and Chinese President Xi Jinping last week, which the US leader described as "very good."
"President Trump's Inauguration Day policy announcements on tariffs were more benign than expected," write Goldman economists including Alec Phillips. "Trump's comments on China were notably less hawkish than during the presidential campaign." —Simon Kennedy | |
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- Halliburton and Schlumberger, both oilfield services providers, gain about 2% in premarket trading. Trump has promised more US oil drilling and pledged to expand the strategic oil reserve.
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Watch Canadian energy and industrials stocks after Trump said he planned to impose tariffs by the start of next month. -
US stocks across sectors with high exposure to China are in focus, given Trump's tough stance on trade. A JPMorgan index of companies with heavy exposure to the country includes Air Products and Chemicals and Celanese. -
Regulation-heavy sectors, such as financials, are expected to do better overall under a Republican government, and deregulation is a highlight of the incoming administration's agenda. Keep an eye on bank stocks and funds such as the Vanguard Financials ETF. — Subrat Patnaik | |
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| Netflix investors are banking on sports and live events to keep fueling a rally. The company, which reports results after the close, reaped huge viewership numbers from two NFL games and a boxing match between Mike Tyson and Jake Paul. "Live events are frankly a huge catalyst, since the viewership numbers are crazy and it opens up a new channel for Netflix to further monetize its user base," said Clayton Allison, portfolio manager at Prime Capital Financial. "While investors want to see numbers that will justify the premium, Netflix is so dominant that I'm not turned off having to pay more to hold it." —Ryan Vlastelica and Carmen Reinicke | |
Word from Wall Street | | "Trump seems to be focused close to home, but I'm sure we're going to see further tariff conversations later on." | | Chris Willcox Head of trading and investment banking at Nomura | | |
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