Global investors will begin the week with a sense of uncertainty as they wait for the inauguration of President-elect Donald Trump, which is expected to have a significant impact on markets. The first day of trading will be Monday, but markets will be closed in observance of Martin Luther King Jr. Day, so any market fallout may not be fully felt until Tuesday.
On the heels of the inauguration, investors will be watching for a series of executive orders on issues such as taxes and tariffs. Tariff-related moves will be in particular focus, as leaks, counter-leaks, and denials since the election have roiled markets. Long-dated US bond yields have risen amid expectations that Trump’s proposed tariffs could spark a revival in inflation.
Earnings season for US corporations is also set to kick off, with a series of companies reporting their fourth-quarter earnings. Key reports will come from streaming giant Netflix, healthcare leader Johnson & Johnson, consumer goods powerhouse Procter & Gamble, and credit card issuer American Express. Analysts expect companies to report a 10.4% year-over-year increase in earnings, according to LSEG IBES data.
Meanwhile, the annual World Economic Forum in Davos, Switzerland, will attract global government and business leaders, including President Trump, who will address the meeting via video link on Wednesday. Other notable attendees include Ukraine’s President Volodymyr Zelenskiy, European Central Bank President Christine Lagarde, and UK Chancellor Rachel Reeves.
Additionally, the Bank of Japan will hold its first policy meeting of the year on Thursday and Friday, with some policymakers suggesting a potential rate hike. A rate hike would narrow the gap between US and Japanese rates, bolstering the yen, which has been hovering near 160 against the dollar.
Oil prices continue to be volatile, with futures gaining 1.3% last week and 1.7% for the week, amid worries over potential supply disruptions and the impact of Western sanctions on Russian crude. Energy traders will be watching for any developments surrounding Trump’s return to the White House, as his pick for Treasury secretary has expressed readiness to impose tougher sanctions on Russian oil.