Rise and shine everyone.

It’s been a busy two days, post the Presidential inauguration. The President has been signing executive orders and the market is trying to make sense of everything that’s being done and said. Bear in mind, that these orders still need to be implemented, but most point towards inflationary pressures.

US equities kicked off strongly following Trump’s inauguration, buoyed by positive earnings results and optimism about a pro-business administration. Netflix jumped 14% after-hours on robust subscriber growth, while 3M gained 4%. Small-cap-focused Russell, the Dow, and the S&P outperformed the Nasdaq.

The US Treasury curve flattened as buying concentrated at the long end, signaling cautious optimism. Veteran investor Stan Druckenmiller captured the mood, noting the shift from “the most anti-business administration to the opposite.”

Currencies saw overnight gains but retraced after Trump’s comments about potential tariffs on China. Asian markets reacted divergently—Hong Kong and China equities underperformed, while Japan’s Nikkei gained 1.4%.

Post-close, Trump’s flurry of actions and announcements stole headlines. He confirmed plans for a $500B "Stargate" AI infrastructure project with founding partners including Oracle (+4.6% A/H), SoftBank (+10% in Tokyo, +4.8% via ARM A/H), Nvidia (+1.8% A/H), Microsoft (+1.5% A/H), and OpenAI. Other moves included signaling openness to Elon Musk purchasing TikTok, advancing federal land for data centers, and pushing for an early renegotiation of the USMCA trade deal. On tariffs, Trump indicated the EU will be included in upcoming measures, alongside China, Mexico, and Canada.

In Japan, expectations for a 25bps rate hike by the Bank of Japan (BOJ) rose to 91%, with the decision likely at the January 24 policy meeting. This would mark the largest hike in the BOJ’s current tightening cycle. Reports suggest strong wage hike momentum and regional demand-driven price increases are supporting the BOJ’s potential move.

European markets advanced on optimism about Trump’s $500B AI investment and measured approach to tariffs.

Johnson & Johnson added to the upbeat mood this morning, exceeding expectations on both earnings and revenue, driven by strong pharmaceutical sales and a rebound in elective procedures.

In commodities, Rio Tinto expressed confidence in gaining Trump’s approval for its Resolution copper mine in Arizona after a 12-year permitting battle. The mine, 55% owned by Rio Tinto and 45% by BHP, is poised to become North America’s largest copper producer upon development.

Chart of the Day - US Earnings Growth in the past decade has far outrun the rest of the world

What we’re watching

President Trump’s first interview on Fox News tonight at 21:00 ET

Calendars

(news taken from Reuters, FT, Bloomberg; Calendar from Trading Economics)