LONDON: European and Asian stock markets rose on Monday and bitcoin soared to a new high as Donald Trump prepared to re-enter office as president of the world’s biggest economy.

The dollar slid more than one per cent versus the euro and lost similar ground against the pound after The Wall Street Journal reported that Trump would not immediately impose tariffs upon his inauguration.

The dollar shed 1.4pc against the European single currency, with one euro buying $1.0419. It slid 1.1pc versus sterling, with the pound buying $1.2314.

Oil prices also fell more than 1pc.

Kathleen Brooks, research director at XTB, suggested a second Trump term could prove to be less volatile than his first, noting that “Treasury Secretary Scott Bessant has spoken out against tariffs and is said to be a moderating influence on the President.” Noting forecasts of a flood of executive orders, Brooks said that there were signs that “a programme of tariffs is still under debate by Trump and his team.” Bitcoin hit a record above $109,000 before easing as Trump, who has signalled plans to deregulate the cryptocurrency sector, prepares to be sworn in as US president.

Over the weekend, Trump launched his own cryptocurrency, a so-called meme coin appropriately called $TRUMP, sparking feverish buying that sent its market capitalisation soaring to several billion dollars.

“Markets are beating to the drum of Donald Trump on the day of his return to the White House,” noted Russ Mould, investment director at AJ Bell.

Frankfurt’s blue-chip DAX soared past 21,000 points for the first time.

“In the new year, the German leading index has been the secret star among global stock indices,” despite a gloomy German economic outlook, said Jochen Stanzl, Chief Market Analyst at CMC Markets.

London’s benchmark FTSE 100 index was also trading close to record highs.

Wall Street was shut Monday for the Martin Luther King holiday, but US stock futures were solidly higher.

Ahead of the inauguration, sentiment has been boosted by positive talks between Trump and Chinese President Xi Jinping that soothed worries about the incoming US leader’s second term.

Trump’s declarations he will impose hefty tariffs on imports have fanned fears of another debilitating trade war between the US and China, the world’s second-largest economy.

Pledges to slash taxes, regulations and immigration have also led to concerns that inflation could be reignited and force the Federal Reserve to hold off cutting interest rates further, with some observers even flagging possible hikes.

“The start of a new presidency often brings fresh energy — and uncertainty — to the financial markets,” said Saxo Markets chief investment strategist Charu Chanana.

“With Donald Trump’s inauguration, investors are bracing for significant policy shifts. This could mean changes in taxes, spending, and trade agreements.” Hong Kong’s stock market led gains in Asia amid hopes that the feared trade war can be averted.

Seoul slipped after the Bank of Korea cut its 2025 economic growth forecast owing to weakening sentiment and political risks following last month’s brief declaration of martial law by President Yoon Suk Yeol and the political crisis it has sparked.

There was little relief from news that the South Korean central bank had unveiled a $250 billion support package for its exporters, citing the risk of possible tariffs by Trump.

Published in Dawn, January 21st, 2025