By Naomi Rovnick, Amanda Cooper and Dhara Ranasinghe
LONDON (Reuters) – U.S. President Donald Trump’s return to the White House has been met with both relief and disappointment in global markets as investors try to figure out what the next four years will bring.
“The approach will be chaotic, unpredictable, spontaneous and driven by Trump himself,” said Russel Matthews, senior portfolio manager, global macro at RBC BlueBay Asset Management.
Here’s a look at some of the winners and losers to emerge from Trump’s first 24 hours in office.
1/ CALL NAME
Designating Canada and Mexico as potential targets for tariffs took a further toll on their currencies, which fell sharply after Trump’s inauguration speech.
Bets on the Mexican peso or other rate-exposed emerging market currencies were too risky, said Fidelity International multi-asset manager Becky Qin.
“It’s so binary and so dependent on the dollar,” she said. “The policy uncertainty is too great.”
Goldman Sachs strategists said they see a 70% chance that Trump will hit China with 20% tariffs, but said the chances of him making good on his promise of 25% tariffs on Canada and Mexico were slim.
The dollar is trading at its highest level against the Canadian currency in almost five years, with the so-called Loonie also under pressure from economic weakness and expectations for rate cuts.
Markets have shifted to expectations that China will not allow its tightly controlled currency to weaken to counter heavy U.S. tariffs. Analysts still expect a decline of 5% to 6% by the end of the year.
Fidelity’s Qin said she had a position that would benefit if the offshore yuan weakens further against the dollar, which could be one of the few trades that stands out if aggressive rates spook markets.
2/ ROLLER COASTER
The euro and sterling rose more than 1% on Monday, posting their best single-day gain against the dollar since late November, cheered by Trump’s decision not to immediately impose tariffs.
Still, Tuesday’s decline in European currencies suggested the rebound was already over.
ING currency strategist Francesco Pesole said if more days pass without Europe being explicitly mentioned in Trump’s tariff comments, the euro could benefit.
“That support may prove short-lived, however, as things – as we learned yesterday with Canada and Mexico – can change abruptly due to protectionism, and the euro remains generally unattractive due to some macro fundamentals,” said he.
ABN Amro has cut its year-end euro/dollar forecast from $1 to $0.98, implying a 5% weakening from current levels.
3/ HOPE VERSUS FEAR
European shares posted their worst ever performance against Wall Street last year, but are up more than 3% so far in January as investors felt pessimism about economic growth and US tariffs had gone too far.
European shares attracted their second-largest allocation from major investors in 25 years this month, BofA’s latest global fund manager survey showed.
Amelie Derambure, senior multi-asset manager at Europe’s largest investor Amundi, said the group has upgraded its view on European equities from negative to neutral on valuation grounds and prefers European banks due to their relatively low exposure to rates.
And despite US policy risks, Citi economists expect economic growth of 1% in the euro zone this year, up from 0.8% in 2024, as ECB rate cuts boost business investment and consumer spending.
However, European stocks most exposed to US trade policies suffered on Tuesday, as shares of carmakers Stellantis, Volkswagen and BMW were all lower.
4/ “DRILL, BABY, DRILL”
Trump has pledged to increase U.S. oil and gas production, replenish strategic reserves and export U.S. energy around the world. US oil prices have reacted accordingly.
US crude futures are down 4% over the past three trading days, while Brent crude is down just 2%.
The United States is already the world’s largest producer of crude oil, accounting for about 12% of total supply. It is also a major exporter, producing around 4 million barrels per day.
But it has to do with competition. The OPEC+ group of major exporters, which includes Russia, wants to undo self-imposed supply cuts but is concerned about weak global demand.
Meanwhile, Trump’s plans to impose a 25% tariff on Canadian imports could negatively impact U.S. refineries, which rely on their neighbor for about 20% of their barrels.
5/ OUTSIDE IN THE COLD
Cryptocurrencies in particular, which boomed as Trump’s Nov. 5 election victory raised hopes for a more regulatory-friendly environment, suffered a setback as his first set of policies made no reference to the asset class.
Bitcoin, the world’s largest cryptocurrency, retreated from a record high of $109,071 on Monday. Trump himself launched a cryptocurrency on Friday that was already 50% below Monday’s peak price of $74.59, according to cryptocurrency price tracker CoinGecko.
Trump’s inaugural speech disappointed those who had hoped he would spark a major change in U.S. policy toward crypto that could pave the way for more selling, analysts said. Others said some of his personnel choices were a positive sign.
Trump has tapped two crypto-friendly figures: Mark Uyeda, a Republican member of the U.S. Securities and Exchange Commission, as the agency’s acting chairman, and former SEC Commissioner Paul Atkins to permanently lead the agency.
(Reporting by Naomi Rovnick, Amanda Cooper, Dhara Ranasinghe; graphics and additional reporting by Nell Mackenzie; editing by Kirsten Donovan)