“A new chapter, new policies, and new opportunities.”
Known for his bold policies and market-moving rhetoric, Trump 2.0 has traders on high alert for the opportunities and risks his administration may bring.
Let’s explore how this inauguration could impact the markets and how traders can prepare for the potential shifts ahead.
Trump’s return to the presidency is expected to bring renewed focus on:
Trump has announced plans to implement 25% tariffs on imports from Canada and Mexico starting February 1, 2025, aiming to bolster domestic manufacturing and generate revenue through the newly proposed External Revenue Service.
On top of that, he has signed executive orders to open the Arctic National Wildlife Refuge for oil drilling and ease regulations on gas and oil production, declaring a National Energy Emergency to enhance electricity production.
These measures are intended to stimulate economic growth, particularly in the energy and manufacturing sectors.
In line with his “America First” agenda, Trump has directed federal agencies to address U.S. trade deficits and unfair practices, with a focus on enforcing tariffs to revitalize American industry.
While no specific tariffs were detailed in his inaugural speech, the administration plans to assess China’s adherence to the 2020 “Phase 1” trade deal, which fell short due to the COVID-19 pandemic.
These actions signal potential shifts in trade agreements and international relations that could impact various sectors, including agriculture and technology.
Trump’s administration is expected to pursue significant deregulation across multiple industries. He has already signed orders to ease regulations on oil and gas production and has declared a National Energy Emergency to boost domestic energy output.
Furthermore, plans to cut federal regulations and promote fossil fuels indicate a broader strategy to reduce governmental oversight in sectors such as energy, finance, and technology.
This approach aims to foster a more business-friendly environment but may raise concerns regarding environmental protection and financial oversight.
Traders should prepare for immediate market reactions, especially following his inaugural address and early executive actions.
Trump’s policies have historically been bold and polarising, increasing market volatility. Taking a page from experience during his first presidency, here are markets traders might benefit from watching:
The USD is poised for significant volatility as fiscal and trade policies under Trump’s administration take shape. If proposed tax reforms and tariffs materialise, the dollar could strengthen on expectations of increased domestic investment and growth.
Against the EUR/USD, a stronger dollar could push the pair lower, particularly if the European Central Bank maintains its dovish stance on interest rates.
Conversely, any delays in implementing these policies or a rise in inflation concerns may weigh on the dollar, providing the euro an opportunity to gain.
The USD/JPY pair, closely tied to risk sentiment, may also see sharp movements. Increased international relations or uncertainty stemming from trade negotiations could weaken the dollar as traders flock to the safe-haven yen. However, any signs of progress on trade agreements or fiscal stimulus in the U.S. could boost dollar strength, pushing the pair higher.
Traders should monitor developments on tariffs, trade negotiations, and Federal Reserve guidance closely, as these factors will heavily influence dollar movements against major currency pairs.
Infrastructure and construction companies could see gains with increased government spending on public works projects, driving demand for materials and construction services.
Similarly, energy stocks, particularly those tied to domestic oil and gas production, may benefit from policies favouring fossil fuels and deregulation of the energy sector.
Healthcare equities could experience volatility as potential reforms to pharmaceutical pricing or changes to the Affordable Care Act unfold, creating both risks and opportunities for traders.
Defence and aerospace stocks stand to gain from increased government spending on military programs, aligning with the administration’s focus on strengthening national security.
On the other hand, technology companies with significant global supply chains may face challenges due to proposed trade restrictions and tariff policies, adding pressure to the sector.
As these industries respond to evolving priorities, traders should remain vigilant to capitalise on emerging trends and adjust portfolios accordingly.
Gold, often viewed as a safe-haven asset, is likely to experience price swings driven by shifts in global risk sentiment and uncertainty surrounding Trump’s policies.
Any cross-border relations or concerns over inflation resulting from proposed economic reforms could further bolster demand for gold as traders seek stability.
Oil markets, closely tied to energy policies, may also see volatility. Policies favouring increased domestic production and potential changes to international trade agreements could impact global supply dynamics and influence oil prices.
Additionally, shifts in demand expectations, particularly from key consumers like China, and OPEC’s response to U.S. energy policies will play a critical role in shaping oil’s trajectory. Traders should closely monitor these factors for opportunities in the commodities market.
Political transitions require preparation and adaptability. Here’s how traders can position themselves:
Following Trump’s inauguration, his administration has already signalled bold moves, including new tariffs on imports from Canada and Mexico, easing regulations on oil and gas production, and declaring a National Energy Emergency.
These developments are poised to reshape trade and energy markets, with potential ripple effects across equities, forex, and commodities.
Traders should stay alert to further announcements on trade agreements, tax reforms, and fiscal stimulus measures, as these policies could have immediate and far-reaching market impacts.
Navigate high-volatility markets with caution by employing strategies like stop-loss orders to limit potential losses and using proper position sizing to manage risk exposure.
These tools can help safeguard your portfolio as markets react to evolving policies and economic shifts.
Keep an eye on energy, infrastructure, and financials—sectors poised to benefit from Trump’s policy focus.
Deregulation efforts could boost energy and financial stocks, while increased infrastructure spending may drive growth in the construction and materials industries. These areas could see notable momentum as policies unfold.
Merge macroeconomic insights with technical analysis to refine your trading strategies.
Trump’s inauguration is more than a political milestone—it’s a market-moving event. With potential shifts in fiscal policy, trade relations, and industry regulations, traders need to stay informed and agile.
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