Stocks Gain, Bitcoin Soars as World Awaits Trump: Markets Wrap

(Bloomberg) — European stocks edged higher along with US equity futures, while the dollar weakened ahead of Donald Trump’s inauguration. Bitcoin soared to a record.

Trump is expected to unleash a barrage of executive orders on his first day in office, including decrees on immigration, tariffs and energy, as part of a sweeping effort to quickly implement his policy agenda upon taking office. While many investors expect those interventions to be business-friendly, they’ll also introduce a note of unpredictability.

“One thing is 100% certain: Trump wants to keep the US stock markets in a good mood,” said Dana Malas, a strategist at SEB. “There will be a strong growth- and business-focused policy (for the US), with inflationary elements, and expect abrupt shifts under the motto that agreements are there to be broken.”

Even before taking office, Trump is already shifting markets. His conversation with China’s leader Xi Jinping — which he described as “very good” — boosted Asian stocks on Monday. And Bitcoin jumped as much as 5.5% after the president-elect and his wife Melania unveiled their own memecoins over the weekend.

The Stoxx Europe 600 index added about 0.1% at the open, led by technology stocks. Futures and the S&P 500 and Nasdaq 100 posted modest gains, with Wall Street closed Monday for a holiday. A gauge of the dollar slipped for the first time in three days, though it remains close to the 13-month high it reached earlier this month.

Among the array of actions planned by Trump is a move to invoke emergency powers as part of his plan to unleash domestic energy production while seeking to reverse President Joe Biden’s actions to combat climate change, according to people familiar with the matter. Crude oil was steady, while energy stocks fell in Europe.

Trump’s combination of pro-growth and protectionist policies have prompted analysts to predict a less dovish Federal Reserve, a strengthening dollar and weakness in bonds. For one, Nomura Holdings Inc. has joined T. Rowe Price in seeing a chance of 10-year Treasury yields rising to 6% this year, while a small group of bond traders believe the US central bank’s next move on interest rates will be to increase them, contrary to the majority view that rates will be cut.

The stronger appetite for risk assets in Asia came after Trump and Xi discussed trade, TikTok and fentanyl, which may set the tone for relations in the early days of the new administration. Adding to the brighter mood, TikTok started restoring service in the US on Sunday as Trump said he would halt enforcement of a law requiring the app’s Chinese owner to find a buyer for three months.

Whether the momentum can continue hinges on how quickly Trump will implement his policies ranging from lower taxes to higher tariffs and tighter immigration control, the inflationary impact of which may keep the dollar strong and Treasury yields elevated. His stance on issues including the tech rivalry with China and climate change also will likely affect investment decisions on sectors from semiconductors to electric vehicles, and shipbuilding.

“What sets the tone for us in Asia is that Trump himself has said he’s got a very good phone call with President Xi Jinping,” Heng Koon How, head of markets strategy at United Overseas Bank, told Bloomberg TV. “Hopefully that sets a much more constructive tone between the United States and China.” 

Elsewhere, Chinese Vice President Han Zheng met billionaire Elon Musk and other US business figures, underscoring Beijing’s efforts to set a positive tone in ties with the US before Trump returns to office.

The World Economic Forum’s annual meeting gets underway later Monday. Among the group of billionaires set to join the pilgrimage of the rich and powerful to Davos, Switzerland are Larry Fink, Ray Dalio and Marc Benioff. Trump will speak virtually to the gathering three days after his inauguration.

Later in the week, the focus will shift toward the Bank of Japan’s scheduled policy decision on Friday, with about three quarters of economists in a Bloomberg survey expecting it to hike its key rate.

Key events this week: 

• The annual World Economic Forum in Davos begins, Monday
• Donald Trump to be sworn in as 47th president of US, Monday
• UK jobless claims, unemployment, Tuesday
• Canada CPI, Tuesday
• New Zealand CPI, Wednesday
• Malaysia CPI, rate decision, Wednesday
• South Africa retail sales, CPI, Wednesday
• ECB President Christine Lagarde and other officials speak at Davos, Wednesday
• South Korea GDP, Thursday
• Eurozone consumer confidence, Thursday
• Turkey rate decision, Thursday
• Norway rate decision, Thursday
• Canada retail sales, Thursday
• Trump will join the World Economic Forum for an online “dialogue”
• Japan CPI, rate decision, Friday
• India, euro area, UK PMIs, Friday
• ECB President Christine Lagarde and BlackRock CEO Larry Fink speak at Davos, Friday

Some of the main moves in markets: 

Stocks

• The Stoxx Europe 600 rose 0.1% as of 8:25 a.m. London time
• S&P 500 futures were little changed
• Nasdaq 100 futures rose 0.1%
• Futures on the Dow Jones Industrial Average were little changed
• The MSCI Asia Pacific Index rose 1%
• The MSCI Emerging Markets Index rose 0.9%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro rose 0.4% to $1.0310
• The Japanese yen was little changed at 156.16 per dollar
• The offshore yuan rose 0.2% to 7.3273 per dollar
• The British pound rose 0.3% to $1.2201

Cryptocurrencies

• Bitcoin rose 4.3% to $108,031.14
• Ether rose 5.3% to $3,402.2

Bonds

• The yield on 10-year Treasuries was little changed at 4.63%
• Germany’s 10-year yield was little changed at 2.53%
• Britain’s 10-year yield was little changed at 4.66%

Commodities

• Brent crude fell 0.1% to $80.67 a barrel
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Matthew Burgess.

(An earlier version of this story corrected a reference to Fed forecasts in the ninth paragraph.)

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