Markets Brace for Trump’s Second Term as Inauguration Looms

WASHINGTON, D.C. — Markets worldwide are bracing for the start of Donald Trump‘s second presidential term as he prepares to take the oath of office Monday, with investors closely watching for potential policy shifts that could impact global trade, inflation, and financial markets.

Trump, the first president since Grover Cleveland in the late 1800s to serve two non-consecutive terms, is set to be inaugurated at noon Eastern Time (1700 GMT) in the Capitol rotunda. Cold weather has forced the ceremony indoors for the first time in 40 years. His return to the White House has already sparked volatility, with the dollar drifting lower in cautious Asian trade and Bitcoin dropping 3% to $101,800.

Investors have been selling bonds and buying dollars since mid-September, anticipating that Trump’s policies—including raising tariffs, cutting taxes, and cracking down on immigration—could stoke inflation. Trump has vowed to sign nearly 100 executive orders within hours of taking office, focusing on deportations, deregulation, and energy production.

“We still see Financials as the biggest sectoral winner under the Trump administration,” said Chris Senyek, chief investment strategist at Wolfe Research. Rising business and consumer confidence, along with potential tax cuts and deregulation, are expected to drive the sector forward.

U.S. markets are closed Monday for Martin Luther King Jr. Day, but futures trading and foreign exchange markets remain active. The dollar recently hit multiyear highs, but traders are questioning whether it could retreat if Trump adopts a slower approach to policy implementation. Tariffs, a hallmark of Trump’s first term, are also under scrutiny for their impact on the dollar’s strength.

In Europe, markets ended the week on a positive note, with the pan-European STOXX 600 index rising 1.35% to close at a record high. Mining stocks led the gains, buoyed by news of a potential merger between two major companies, though talks have since stalled.

Meanwhile, tensions in the Middle East saw Hamas and Israel exchange hostages and prisoners as part of a deal that took effect Sunday. Hamas released three women to Israel in exchange for Palestinian prisoners, with more exchanges expected in the coming weeks.

As Trump prepares to enter the White House, investors are gearing up for potential market shifts. The S&P 500 surged above 6,000 following Trump’s election victory but has since erased most of its gains. However, muted inflation readings and better-than-expected economic data have revived optimism, with all sectors ending the week in positive territory.

“We still see Financials as the biggest sectoral winner under the Trump administration,” Senyek reiterated, highlighting the potential for forward momentum in bank stocks.

With Trump’s inauguration just hours away, the world is watching to see how his second term will shape the global economy.