As Donald Trump prepares to take office for his second term on Monday, investors are closely monitoring his plans to sign a series of executive orders on his first day. While U.S. markets will be closed for Martin Luther King Jr. Day, the potential market fallout from Trump’s policies, particularly on tariffs, may not be fully felt until Tuesday.
Tariff-related moves are a key focus, as leaks, counter-leaks, and denials since the election have already caused market volatility. Ahead of the inauguration, long-dated U.S. bond yields have risen, reflecting concerns that Trump’s proposed tariffs could reignite inflation.
Earnings Season Kicks Off with High Expectations
Investors hoping for another strong year in equity markets, driven by robust U.S. corporate profits, will gain clarity this week as several major companies report their fourth-quarter earnings. Key reports are expected from streaming giant Netflix (NASDAQ: NFLX), healthcare leader Johnson & Johnson (NYSE: JNJ), consumer goods powerhouse Procter & Gamble (NYSE: PG), and credit card issuer American Express (NYSE: AXP).
Earnings season began last week with big banks reporting higher profits, fueled by a surge in deal-making and strong equity market performance. According to LSEG IBES data cited by Reuters, analysts predict a 10.4% year-over-year increase in fourth-quarter earnings for S&P 500 companies.
Davos 2025: Global Leaders Address Economic Risks
The World Economic Forum (WEF) in Davos, Switzerland, kicks off on Monday, bringing together global government and business leaders. A recent WEF survey highlighted armed conflict as the most severe risk to the global economy in 2025, followed by extreme weather events.
Trump is scheduled to address the meeting via video link on Wednesday, while Ukraine’s President Volodymyr Zelenskiy will deliver a speech on Monday. Other notable attendees include European Central Bank President Christine Lagarde, European Commission President Ursula von der Leyen, UK Chancellor Rachel Reeves, and China’s Vice Premier Ding Xuexiang.
Bank of Japan Considers Rate Hike Amid Global Uncertainty
The Bank of Japan (BOJ) will hold its first policy meeting of the year on Thursday and Friday, with speculation mounting over a potential rate hike. BOJ Governor Kazuo Ueda and Deputy Governor Ryozo Himino have both indicated that the decision to raise borrowing costs will be up for debate.
A rate hike would narrow the gap between U.S. and Japanese interest rates, potentially strengthening the yen. The currency has been hovering near 160 against the dollar, prompting the BOJ to intervene in foreign exchange markets to stabilize it.
Oil Prices Surge Amid Sanctions and Arctic Cold Snap
Oil prices climbed last week, with Brent crude futures gaining 1.3% and U.S. West Texas Intermediate crude futures rising 1.7%. The latest round of U.S. sanctions on Russia’s energy trade has heightened fears of supply disruptions, driving prices up by 10% this month.
Energy traders are also assessing the potential impact of Trump’s return to the White House, as his pick for Treasury secretary has signaled readiness to impose tougher sanctions on Russian oil. Meanwhile, a severe Arctic cold snap across much of the U.S. is expected to boost heating oil demand, further supporting prices.
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Conclusion: A Week of High Stakes for Investors and Global Leaders
As Trump’s second inauguration approaches, investors are bracing for potential market shifts driven by executive orders, earnings reports, and global economic developments. From Davos to the Bank of Japan, the week ahead promises to be pivotal for the global economy, with implications for inflation, currency markets, and energy prices. Stay tuned for updates as these events unfold.
