Stocks enjoy 'Trump bump', but oil slumps

Global stock markets climbed on Tuesday as Donald Trump wasted no time in starting his second term as US president with a raft of announcements affecting the global economy.

Wall Street stocks rose as markets greeted Trump’s early executive orders and comments that raised hopes new tariffs may not be as bad as feared.

Oil prices slumped however on the prospect of more drilling in the United States. The rise on Wall Street following the Martin Luther King public holiday was part of a “Trump bump,” noted Briefing.com analyst Patrick O’Hare.

On becoming president, Trump signed executive orders that indicated he could resume his hardball approach to global diplomacy and trade.

He also spoke about the possibility of imposing a 25-percent tariff on Canadian and Mexican goods, which sent their currencies tumbling.

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Canadian and Mexican stock markets were marginally higher in Tuesday trading. “What was missing in yesterday’s executive orders, however, was any declaration of a decisive tariff action against China,” said O’Hare. “Instead, President Trump said existing trade agreements should be reviewed for any recommended revisions.”

Analysts at Goldman Sachs also found Trump’s initial announcements to have been “more benign than expected.”

“Trump’s comments on China were notably less hawkish than during the presidential campaign or even his more recent comments since the election,” noted economists at Goldman Sachs.

That helped Chinese markets push higher, with Hong Kong gaining nearly one percent. A top Chinese official said on Tuesday that no country would emerge victorious from a trade war.

“Protectionism leads nowhere and there are no winners in a trade war,” Vice Premier Ding Xuexiang said in a speech at the World Economic Forum in Davos, Switzerland.

Trump also gave social media app TikTok 75 days to find a buyer for its US business, after its Chinese owners ByteDance missed a Saturday deadline to sell its US subsidiary to non-Chinese buyers or be banned.

European stocks also ended the day in the green, with both Frankfurt’s DAX and London’s FTSE 100 setting record closes. Wall Street received an initial Trump bump after his November re-election, with investors excited about the prospect of tax cuts and deregulation. But as November gave way to December, the bump dissipated on rising fears that Trump’s plans to slap tariffs on key US trading partners would spark inflation and dim the prospect of further Federal Reserve interest rate cuts.