Trump is about to take office. What are the focal points in the financial market? It is expected that on the first day of taking office on January 20th, he will introduce a series of bills. He will not only revoke some of Biden's bills, continue some of the bills from his first term, but also propose completely new bills. This will undoubtedly trigger a drastic shock in the financial market. From the perspective of assets, he tends to boost the US stock market while putting pressure on non-US economies. Crude oil may face downward pressure, and the safe-haven function of gold may also be impacted.
The S&P in the US stock market is expected to enjoy multiple benefits. Trump's new policies are likely to implement tax cuts to reduce the burden on enterprises. At the same time, he will relax regulations, especially in terms of corporate buybacks, to enhance the flexibility of corporate capital operations. In addition, given the $1.5 trillion in losses caused by the Los Angeles fire, the new Trump administration is highly likely to introduce a large-scale economic stimulus package. Although this plan needs to be approved by Congress and is difficult to be implemented in the short term, once the news spreads, it will greatly boost the S&P. There is a high possibility that the S&P will break through 6,100 and may even reach 6,200.
On the contrary, the euro is in deep trouble. Europe is currently under heavy economic pressure, with a difficult industrial transformation and a divided political situation. Germany and France are about to hold parliamentary elections, and the political outlook is uncertain. If the new government shifts to welfare policies, the economic burden will be further increased. After Trump takes office, if he implements tariffs to hit the European economy, or even withdraws from NATO or suspends military aid to Ukraine, the euro will face huge pressure and is very likely to fall below the 1.0 mark.
In the case of Canada, the government has just undergone a transition. Trump has repeatedly stated that he will impose additional tariffs on Canadian goods and exert political pressure. Looking back at history, when the Canadian dollar faced difficulties in 2016 and 2020, its exchange rate against the US dollar dropped to a minimum of 1.466. Although there is currently a certain distance from this level, the gap is not far. If the new Trump administration exerts excessive pressure, the Canadian dollar is likely to depreciate further, pushing the US dollar - Canadian dollar exchange rate close to its historical high.
The situation of other non-US currencies is also not optimistic. The trade policies of the new Trump administration towards its allies, especially the economic and trade disputes with China, if escalated, will drag down the currencies of many economies such as Europe, the UK, and Japan, subjecting them to greater downward pressure.
The uncertainty in the crude oil market is also increasing. Trump advocates increasing US energy production. If he revokes the relevant bills of the Biden era that prohibited offshore drilling in the US and sanctions against Russia, the crude oil supplies of the US and Russia will increase significantly, and oil prices will face a pullback. However, given the historical conflicts between Trump and Iran, if the new administration strengthens sanctions against Iran, oil prices may experience a new round of increases.
The gold market is also full of uncertainties. Since Biden took office, the price of gold has increased significantly, which is closely related to his governance and management of the Federal Reserve. The new Trump administration may reform the Federal Reserve and even adjust the fiscal reserve policy, such as introducing virtual assets. All these may reduce the market's attention to gold, putting downward pressure on gold prices. In addition, after Trump takes office, if the safe-haven sentiment cools down, the price of gold will also be affected. However, since Trump and his Treasury Secretary have repeatedly mentioned that non-US currencies are unreasonably depreciated, there is a possibility of a rebound in non-US currencies in the future, which will also increase the volatility of the gold market. Investors need to focus on the short-term market conditions of gold, grasp the operation rhythm well, and make cautious decisions regarding long-term allocation.
I would like to remind everyone that after Trump takes office, his remarks will have a significant impact on market sentiment, while the influence of data will relatively weaken. When the US market opens, closely monitor his news updates. Market conditions may erupt rapidly with intense volatility, but the duration may be shortened, and extreme market conditions may also occur due to factors such as negotiations. Please prepare in advance. Thank you for watching, and see you in the next episode!
By Wayne Lai
A senior financial practitioner in Hong Kong. He has served well-known financial public relations firms, financial media, and investment banks. Past service targets include Societe Generale, CMC Markets, KVB Kunlun, etc. At the same time, he is a part-time lecturer at colleges and universities, a regular guest of financial media, and an author of financial readings. He has represented Hong Kong to attend world financial forums many times. Currently, he is the research and marketing director of Royal Capital. Over the years, he has won multiple industry awards for service institutions.
Disclaimer: The content of this article is for reference only and does not constitute an offer, recommendation, or inducement for any person to submit an offer to buy or subscribe for any securities. The price of structured products can rise or fall sharply, and investors may suffer total losses. Past performance does not reflect future performance. Before investing, investors should understand the risks and consult professional advisors and refer to relevant listing documents. Nothing in this article constitutes investment, legal, accounting or tax advice, and there is no statement that any investment or strategy is suitable or in line with your individual circumstances.
The S&P in the US stock market is expected to enjoy multiple benefits. Trump's new policies are likely to implement tax cuts to reduce the burden on enterprises. At the same time, he will relax regulations, especially in terms of corporate buybacks, to enhance the flexibility of corporate capital operations. In addition, given the $1.5 trillion in losses caused by the Los Angeles fire, the new Trump administration is highly likely to introduce a large-scale economic stimulus package. Although this plan needs to be approved by Congress and is difficult to be implemented in the short term, once the news spreads, it will greatly boost the S&P. There is a high possibility that the S&P will break through 6,100 and may even reach 6,200.
On the contrary, the euro is in deep trouble. Europe is currently under heavy economic pressure, with a difficult industrial transformation and a divided political situation. Germany and France are about to hold parliamentary elections, and the political outlook is uncertain. If the new government shifts to welfare policies, the economic burden will be further increased. After Trump takes office, if he implements tariffs to hit the European economy, or even withdraws from NATO or suspends military aid to Ukraine, the euro will face huge pressure and is very likely to fall below the 1.0 mark.
In the case of Canada, the government has just undergone a transition. Trump has repeatedly stated that he will impose additional tariffs on Canadian goods and exert political pressure. Looking back at history, when the Canadian dollar faced difficulties in 2016 and 2020, its exchange rate against the US dollar dropped to a minimum of 1.466. Although there is currently a certain distance from this level, the gap is not far. If the new Trump administration exerts excessive pressure, the Canadian dollar is likely to depreciate further, pushing the US dollar - Canadian dollar exchange rate close to its historical high.
The situation of other non-US currencies is also not optimistic. The trade policies of the new Trump administration towards its allies, especially the economic and trade disputes with China, if escalated, will drag down the currencies of many economies such as Europe, the UK, and Japan, subjecting them to greater downward pressure.
The uncertainty in the crude oil market is also increasing. Trump advocates increasing US energy production. If he revokes the relevant bills of the Biden era that prohibited offshore drilling in the US and sanctions against Russia, the crude oil supplies of the US and Russia will increase significantly, and oil prices will face a pullback. However, given the historical conflicts between Trump and Iran, if the new administration strengthens sanctions against Iran, oil prices may experience a new round of increases.
The gold market is also full of uncertainties. Since Biden took office, the price of gold has increased significantly, which is closely related to his governance and management of the Federal Reserve. The new Trump administration may reform the Federal Reserve and even adjust the fiscal reserve policy, such as introducing virtual assets. All these may reduce the market's attention to gold, putting downward pressure on gold prices. In addition, after Trump takes office, if the safe-haven sentiment cools down, the price of gold will also be affected. However, since Trump and his Treasury Secretary have repeatedly mentioned that non-US currencies are unreasonably depreciated, there is a possibility of a rebound in non-US currencies in the future, which will also increase the volatility of the gold market. Investors need to focus on the short-term market conditions of gold, grasp the operation rhythm well, and make cautious decisions regarding long-term allocation.
I would like to remind everyone that after Trump takes office, his remarks will have a significant impact on market sentiment, while the influence of data will relatively weaken. When the US market opens, closely monitor his news updates. Market conditions may erupt rapidly with intense volatility, but the duration may be shortened, and extreme market conditions may also occur due to factors such as negotiations. Please prepare in advance. Thank you for watching, and see you in the next episode!
By Wayne Lai
A senior financial practitioner in Hong Kong. He has served well-known financial public relations firms, financial media, and investment banks. Past service targets include Societe Generale, CMC Markets, KVB Kunlun, etc. At the same time, he is a part-time lecturer at colleges and universities, a regular guest of financial media, and an author of financial readings. He has represented Hong Kong to attend world financial forums many times. Currently, he is the research and marketing director of Royal Capital. Over the years, he has won multiple industry awards for service institutions.
Disclaimer: The content of this article is for reference only and does not constitute an offer, recommendation, or inducement for any person to submit an offer to buy or subscribe for any securities. The price of structured products can rise or fall sharply, and investors may suffer total losses. Past performance does not reflect future performance. Before investing, investors should understand the risks and consult professional advisors and refer to relevant listing documents. Nothing in this article constitutes investment, legal, accounting or tax advice, and there is no statement that any investment or strategy is suitable or in line with your individual circumstances.
