Markets swing as traders re-adjust to trading in Trump’s world

Market participants are becoming reacquainted with trading in Trump’s world. Trump’s first day in office has been marked by significant swings in financial markets, primarily on unclear signals about trade policy and the potential for tariffs. The US Dollar dropped across the board, US futures popped, and Asian indices opened higher after President Trump refrained from slapping tariffs on US trading partners. However, the moves were rapidly unwound after a flurry of comments from the President about applying 25% tariffs on Canada and Mexico from the start of February and is considering universal tariffs on all trading partners. He also threatened to use tariffs to address a trade deficit with Europe, which also said could be addressed by European countries buying more US energy exports.

Oil prices also softened with the Trump administration making its intent clear to boost US energy production and lower prices. Crude oil dropped on an executive order by Trump to declare a state of emergency, allowing the President to direct federal funding to revamp and restart domestic capacity. Trump’s ability to muscle energy prices lower could be limited, given that despite the US being the world’s largest producer, the marginal price of oil is determined by lower cost producers within OPEC. In the short-term, there could be room for crude to drop, with the price well away from the lower end of the range OPEC has notionally allowed it to trade.

_{(Source: Trading View)}
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