(Bloomberg) — Financial markets gave a mixed verdict on US President Donald Trump’s first day in office as traders took heart from an absence of immediate sweeping tariffs on all trade partners, while also expressing caution over likely future measures.
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Chinese shares led gains in Asia after Trump at least initially opted against announcing any new levies on the country. At the same time, the dollar rose as he said he planned to impose threatened tariffs of as much as 25% on Canadian and Mexican imports as soon as Feb. 1. Treasuries rallied as the lack of broader new tariffs eased concern about quicker inflation.
The relatively limited commentary on trade restrictions so far underscores the risk of higher volatility across financial markets as Trump kick-starts his second four-year term. The whipsaw trading in Asia came after US stock futures had rallied and the dollar fell Monday when the president had appeared to be holding off from using executive orders to impose higher global tariffs.
“We believe investors would need to brace for bouts of volatility and whipsaw trading driven by news reports, market chatter and social media posts,” said Chetan Seth, a strategist at Nomura Holdings Inc. “Our view is that a stabilization in Asian equities will likely only occur once the specter of tariffs is behind us, and we think we are clearly not there yet.”
The MSCI Asia Pacific index of regional shares gained 0.2%, down from as much as 0.8% in early trade. US equity futures rose 0.1%.
The Canadian dollar and Mexican peso both tumbled as much as 1.4% following Trump’s tariff threats. Bloomberg’s dollar gauge climbed 0.7%. Treasury 10-year yields fell 9 basis points to 4.54%.
Investors had been on tenterhooks for the first executive orders to stem from the White House after Trump vowed to quickly implement his “America First” agenda. Since his November election victory, everything from the Australian dollar to European equities had been whipsawed on concern widespread tariffs would add to global trade frictions, while the dollar surged as the Federal Reserve turned more cautious on easing policy.
“We’re thinking in terms of 25% on Mexico and Canada, because they’re allowing vast numbers of people,” into the country, Trump told reporters at the Oval Office. “I think we’ll do it February 1.”
