MARKET WRAPS

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No major economic or corporate trading updates expected

Opening Call:

European stock futures were little changed as markets await an expected flurry of policy announcements in the first few hours of Trump's second term. Asian benchmarks advanced; the dollar was lower; oil futures were mixed; while gold edged lower.

Equities:

Stock futures were little changed early Monday as traders brace for a blitz of executive orders from Donald Trump that he plans to issue just hours after he is sworn into office to push forward his top priorities.

Economists are starting to model the effects of Trump's plans to raise tariffs, cut taxes and restrict immigration on the U.S. economy. The upshot: Inflation and interest rates are likely to be higher for at least the next two years than forecasters anticipated before the election.

"Risks to inflation and interest rates are to the upside with a Trump administration," said Augustine Faucher, chief economist at PNC Financial Services Group.

Forex:

The dollar is expected to be mostly influenced by U.S. political developments this week, Commonwealth Bank of Australia said.

While Trump has indicated that he'll sign dozens of executive orders on his first day in office, "we judge expectations may be too high for policy announcements this week," the bank said. Hence, CBA expects the greenback to weaken again this week.

Bonds:

New euro-denominated credit supply could exceed 100 billion euros as European companies issue more debt, Societe Generale's Juan Valencia said.

Supply is nonetheless likely to decline in the coming week, relative to the first two weeks of 2025, as companies enter the earnings blackout season when corporates are banned from issuing new debt, he said. "We still expect healthy levels of issuance from all the major market segments with the investment-grade and senior financials leading the way."

Energy:

Oil futures were mixed early Monday on renewed prospects of supply disruptions, ANZ said. New U.S. sanctions on the Russian oil industry are prompting many buyers to search for alternatives, the bank noted.

However, recent gains could be short-lived as Trump has promised he will work to end the Russia-Ukraine war quickly, it added. In the short term, the market is also watching a cold snap across Texas's key shale-oil-producing Permian Basin, ANZ said.

Metals:

Gold's downside may be limited ahead of Trump's inauguration later today. Concerns are that the arrival of tariffs in the global economic landscape, along with potentially stubborn inflation and geopolitical uncertainties, will spur capital flows into gold as protection, TD Securities said.

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Copper edged lower in Asia after Beijing left its loan prime rate unchanged. Investor sentiment is likely weighed after three consecutive months of unchanged rates despite Beijing's pledge to boost demand.

However, Trump's new policies after he takes office will likely reprice global financial assets, Tongguan Jinyuan Futures said. Meanwhile, cooling U.S. inflation has revived Federal Reserve rate-cut expectations, while investors are also looking forward to more stimulus measures from Beijing, it said.

Taking all these factors in consideration, copper prices will likely be volatile in the near term, it added.


TODAY'S TOP HEADLINES

Trump to Sign Executive Orders on Immigration, Energy, Government Hiring

President-elect Donald Trump is readying a blitz of executive orders that he plans to issue just hours after he is sworn into office, wielding his executive authority on day one to push forward his top priorities related to the border, energy and government reform.

The breadth of the orders, which would make major changes to immigration, energy and government hiring policies, illustrates the urgency with which Trump and his team plan to launch into an ambitious agenda.


The Stock Rally Is Back on Track. Memories of 2022 Linger.

Stocks got their groove back in the days ahead of Donald Trump's presidential inauguration, but some investors are worried that the shadow of 2022 will loom over markets this year.

The S&P 500 index and Dow Jones Industrial Average logged their best week since early November after Wednesday's consumer inflation report suggested underlying price pressures were easing. Investors, who were largely positioned for a disappointing report, rekindled the faltering stock rally. The yield on the benchmark 10-year Treasury note pulled back and ended the week at 4.61%.


Trump, China's Xi Speak Ahead of Inauguration

Chinese leader Xi Jinping and President-elect Donald Trump vowed to engage closely on major issues in a rare phone call ahead of next week's inauguration, where Beijing will be represented by its vice president.

In a social-media post, Trump said the pair discussed trade, fentanyl, TikTok and many other subjects. "It is my expectation that we will solve many problems together, and starting immediately," Trump wrote.


Trump's Tariff Threats Push Europe to Gear Up for Trade Fight

BRUSSELS-President-elect Donald Trump's tariff warnings are forcing Europe to confront an unwanted trade-off: Keep its own tariffs low and shoulder the economic costs, or throw up new barriers in a bid to protect vulnerable industries.

The European Union has long ardently defended the rules-based system for free trade, and last month announced a breakthrough on a giant trade deal with four South American countries. At the same time, the bloc is preparing a combination of carrots and sticks to respond to Trump's plan to use tariffs to achieve domestic and foreign policy objectives.


First Israeli Hostages Released Under Gaza Cease-Fire

The first three Israeli hostages were released Sunday under a cease-fire deal in the Gaza Strip, beginning a drawn-out process that halted more than a year of war and will see 33 captives freed over the next six weeks in exchange for hundreds of Palestinian prisoners.

The cease-fire in Israel's war with Hamas went into force earlier in the day, clearing the way for the women's release. The fragile truce pauses a 15-month war that has been among the deadliest in modern Middle East history, killing 46,000 Palestinians and reducing much of the strip to ruins following Hamas's Oct. 7, 2023, attacks on Israel that killed about 1,200 people and seized about 250 hostages.


TikTok Restoring Service for U.S. Users, After Trump Signals He Will Save It

President-elect Donald Trump rode to TikTok's rescue on Sunday, working on the eve of his new presidency to try to undo a ban effort that he helped initiate during his first term.

The popular social-media app started restoring service on Sunday for its 170 million U.S. users just over 14 hours after halting it in response to a bipartisan national-security law requiring TikTok to shed its Chinese ownership or shut down in the U.S.


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Expected Major Events for Monday

00:01/UK: Jan Rightmove House Price Index

07:00/GER: Dec PPI

07:30/SWI: Dec PPI

07:30/SWI: Dec Import Price Index

09:30/UK: S&P Global UK Consumer Sentiment Index

10:00/EU: Nov Construction output

10:00/LUX: Dec Unemployment

11:00/UK: Dec Aluminium Production report

15:59/GRE: Nov Balance of Payments

17:59/POR: Nov ICSG Copper Report

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This article is a text version of a Wall Street Journal newsletter published earlier today.


(END) Dow Jones Newswires

01-20-25 0018ET