Trump’s AI Push Boosts Nasdaq Optimism Amid Tariff Uncertainty

Trump 2.0: Markets Brace for a Return to Unpredictable Policy Moves

The second term of President Donald Trump has begun with a flurry of policy announcements and tariff threats that have already created waves across U.S. and global markets. Investors are preparing for a period marked by abrupt decisions, high-stakes trade maneuvers, and unpredictable social media pronouncements. Here’s a closer look at the potential impacts on key asset classes.

How Will Trump’s Tariff Talk Shape the Dollar and Trade-Dependent Sectors?

President Trump’s early rhetoric on tariffs against the European Union, China, Canada, and Mexico signals a renewed focus on protectionist trade policies. The possibility of a 10% duty on Chinese imports by February 1 and threats of levies on EU goods have left investors wary.

Although the dollar remained near a two-week low, reflecting concerns over global trade friction, its resilience indicates that markets are pricing in only partial follow-through on these threats.

Export-heavy sectors like agriculture and technology remain vulnerable, particularly as Mexico and Canada push back against potential tariff impositions. U.S. corn farmers are particularly concerned, given that Mexico is their top export market. However, the absence of immediate tariff implementation has temporarily supported market optimism.

Will Stocks Ride the AI Investment Wave or Falter Under Trade Concerns?

Equities have responded positively to the announcement of Stargate, a $500 billion artificial intelligence investment spearheaded by OpenAI, Oracle, and Softbank. Shares of Softbank and Oracle surged following the news, fueling optimism in the technology sector. The NASDAQ and S&P 500 futures advanced, buoyed by Netflix’s stellar earnings and subscriber growth.

However, the broader stock market faces a mixed outlook. While robust corporate earnings and high-profile investments bolster sentiment, escalating trade tensions could dampen gains, particularly for companies with significant international exposure.

Energy and Metals: What Lies Ahead?

Oil prices have been pressured by Trump’s pledge to expand U.S. energy production, with Brent crude and WTI holding steady after sharp declines. This strategy could weigh on global prices in the near term, although geopolitical risks could counteract supply-side growth.

Meanwhile, gold has resumed its climb, reaching a two-and-a-half-month high as investors hedge against policy-driven uncertainty. With threats of tariffs and trade retaliation looming, demand for safe-haven assets is expected to remain strong.

Will Bond Markets Stabilize Amid Policy Uncertainty?

U.S. Treasury yields have seen minor movements, with the 10-year yield edging up slightly after dipping earlier in the week. While the Federal Reserve’s rate cuts remain a backdrop for the bond market, Trump’s unpredictable trade and fiscal policies could inject volatility into yields, particularly if tariffs disrupt economic growth.

Conclusion: Volatility Is the New Normal

President Trump’s return signals a high-stakes era for markets, with policy surprises likely to dominate headlines. While sectors like technology benefit from initiatives such as the Stargate project, trade-exposed industries and the broader economy remain at risk of shocks. Traders should prepare for heightened volatility, as Trump 2.0 appears poised to redefine market conditions in the months ahead.

More Information in our Economic Calendar.