How Markets Reacted to Trump’s First Day Back in the Oval Office | Global News Avenue

Stocks rose on Tuesday, Treasury yields fell, cryptocurrencies were volatile market participant reaction Donald Trump issued a series of executive orders on the first day of his second term as president.

Trump has followed through on promises to limit immigration, erect trade barriers, cut corporate regulations and extend tax cuts. But Morgan Stanley analysts wrote on Tuesday that his first day in office would be “mostly executive action to restrict immigration and trade, with little deregulation and fiscal policy.” That doesn’t mean the administration is no longer prioritizing relaxation, they said. Regulations and tax cuts; just Trump trying to emphasize his “America First” narrative.

They said Trump’s performance on his first day in office met their expectations. “Consistent with our base case, no broad and immediate tariffs have been announced,” the analysts wrote, supporting their view that “tariffs will primarily target Chinese imports,” about 40% of which are currently exempt.

Tariff restrictions send yields and dollar lower

The timing and scale of tariffs have been the biggest unknowns plaguing financial markets since Trump was re-elected. Concerns that U.S. tariffs and international retaliation could reignite inflation have caused U.S. Treasury yields and the dollar to climb in recent months despite the Fed’s rate cuts. The absence of any trade action on Monday — other than an executive order directing federal agencies to review existing trade policies — was a relief to financial markets, with Treasury yields and the dollar falling.

International stock markets breathed a sigh of relief. Stocks in both countries were higher on Tuesday despite Trump saying he could impose 25% tariffs on Canadian and Mexican goods as early as February 1. Chinese stocks held steady, with the MSCI Emerging Markets Index rising more than 1%.

Energy, renewables stocks hit by executive order

One of Trump’s main focuses on Monday was U.S. energy, specifically oil and gas production. Trump declared a “national energy emergency” for the first time on Monday to speed up fossil fuel extraction and “unleash America’s energy.”

Oil futures plunged yesterday as stocks were closed for Martin Luther King Jr. Day and continued to fall on Tuesday. Trump’s order and “drill, baby, drill” ethos are expected to increase oil supplies, putting pressure on prices. U.S. oil benchmark West Texas Intermediate crude futures fell more than 2% on Tuesday to around $76 a barrel.

Energy stocks followed oil prices lower. The S&P 500 energy sector index fell 0.6%, the only sector in decline. Exxon Mobil stock (XOM) and Chevron (CVX), the most valuable U.S. oil producer, fell 0.8% and 2% respectively.

Clean energy stocks also tumbled after Trump signed a series of orders undoing his predecessor’s support for clean energy. Trump on Monday removed the United States from the Paris Agreement and halted the development of new wind farms off U.S. coasts, underscoring the administration’s hostility to renewable energy projects. First Solar (FSLR) and Enphase Energy (ENPH) fell 4.9% and 1.3% respectively.

Cryptocurrency left out of day one priorities

Cryptocurrency prices plunged on Monday after Trump snubbed the industry in his inauguration speech. Bitcoin (Bitcoin USDThe company’s shares climbed to a record high of nearly $110,000 early Monday, ahead of the inauguration, driven by Trump’s insistence that his administration would provide the regulatory transparency the industry has been demanding.

Bitcoin prices fell to around $100,000 in the early hours of Tuesday before recently rebounding to around $106,5000 as Trump’s acting SEC director announced the formation of a task force aimed at creating a clear regulatory framework for crypto assets.

Assets bearing Trump’s name sold off on Tuesday, likely the result of speculators taking profits after the value of assets rose in the run-up to Trump’s inauguration. Shares of Trump Media Technology Group (DJT), the parent company of Truth Social, fell 11% after rising 16% in the week before Monday’s inauguration.

Trump began selling the meme coins on Friday night for about $7 each, and by Sunday morning they were trading above $75, but have since fallen back to around $45. First Lady Melania Trump’s meme coin also launched at about $7 on Friday night and was trading at about $4.50 on Tuesday.