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US stocks rose and Mexican and Canadian currencies slid a day after Donald Trump’s inauguration, as investors assessed a barrage of policy announcements from the new president’s administration.
The S&P 500 added 0.5 per cent after the New York opening bell, while the technology-heavy Nasdaq Composite also rose 0.5 per cent. Both markets had been closed on Monday for a public holiday.
Speaking in the Oval Office late on Monday, Trump said he could enact tariffs of 25 per cent against both Mexico and Canada as soon as February 1, repeating earlier threats to strike two of the US’s closest trading partners with levies to retaliate for weak border security and fentanyl trafficking.
He also unleashed a blitz of executive orders focused on issues ranging from US energy production, to deregulation, echoing campaign promises.
Trump’s renewed tariff warnings sent the Mexican peso down 1.1 per cent and the Canadian dollar almost 1 per cent lower against the US dollar on Tuesday.
Both currencies had gained sharply the previous day after administration officials said Trump would refrain from immediately imposing levies on key partners and instead study the trade situation.
In a sign of how Trump intends to use trade curbs as a key diplomatic tool, the new president also hit out at the EU, threatening the bloc with tariffs if it did not buy more US oil.
“They don’t take our cars, they don’t take our farm product, they don’t take almost anything,” said Trump. “And yet, we take their cars and we take their farm product, we take a lot from them. So we’ll figure that out with either tariffs or they have to buy our oil.”
The euro fell 0.3 per cent against the greenback to $1.039, partially reversing a 1 per cent gain on Monday.
Sterling fell 0.3 per cent to $1.229 after a 0.8 per cent rise the previous day.
“It is still highly likely that considerable tariff actions are coming but in what way and exactly when remain unclear,” said Derek Halpenny, head of markets research at MUFG.
The price swings highlight how investors are preparing for upheaval this week, especially in currency markets, as Trump rolls out plans to unwind many of Joe Biden’s hallmark policies and enact a protectionist agenda that weaponises America’s economic heft.
“This sort of volatility is the new normal,” said Eric Winograd, an economist at AllianceBernstein. “Policy under the Trump administration is likely to be less predictable and less process-oriented than what we have become accustomed to under the Biden administration.”
Elsewhere in stock markets, the FTSE 100 was up 0.1 per cent in afternoon trading, while the Dax was up 0.1 per cent. The broad-based Europe Stoxx 600 rose 0.2 per cent.
Wind companies fell after the Trump administration said it would halt permitting and leasing of new wind projects. Ørsted, the world’s largest offshore wind developer, which also announced fresh writedowns on its US business, tumbled 13.6 per cent. Danish turbine makers Vestas fell 2.2 per cent, while German group Nordex was down 1.1 per cent.
Bitcoin, which briefly hit a new intraday high of $109,241 on inauguration day, subsequently reversed gains as the president made no mention of cryptocurrency policy in his inaugural address. Prices edged up 2.4 per cent to $105,013 per token on Tuesday.
Reporting by Adam Samson and Harriet Clarfelt in New York, Aime Williams in Washington, Arjun Neil Alim in Hong Kong, Leo Lewis in Tokyo, Nic Fildes in Sydney and Mari Novik and Ian Smith in London
