Markets Reaction After Trump's Day 1 At White House: Futures, Dollar, More; Will DJIA Fall Or Rise On Jan-21?

US market witnessed a mixed trend on Tuesday, January 21, 2025, which comes after the first day of Donald Trump as US President. US stock futures traded volatile, while the dollar surged to above 108.5 levels against a basket of currencies. Spot Gold strengthened above $2,720 an ounce. However, treasury yields and US indices like Dow Jones, S&P 500 and Nasdaq Composite will react to Trump's inaugural speech and executive orders on January 21, in the late evening of Indian Standard Time zone. The reason is that Wall Street was closed from January 18-20 due to the weekend and Martin Luther King Jr Day.

US Stocks Futures:

Currently, Dow Jones Futures - Mar 25, rose by 152 points or 0.4% to trade at 43,850, while it rose as much as to 43,979 in the early trade. The S&P 500 Index Futures also climbed by 14.75 points or 0.24% to trade at 6,048.25, after hitting an intraday high of 6,078.25. Moreover, the Nasdaq-100 Futures surged by 41.50 points or 0.19% to trade at 21,640.25, after hitting an intraday high of 21,744.75.

According to Trading Economics data, the US stock futures struggled to gain momentum on Tuesday after President Donald Trump announced he was considering imposing 25% tariffs on Canada and Mexico as early as Feb. 1, citing concerns over illegal immigration at the US border.

The data added, that Trump also mentioned China but did not offer further details. His remarks disappointed traders who had hoped for a delay in new tariffs, especially after reports on Monday suggested no immediate tariff actions as part of his early executive orders. However, market participants remain focused on Trump's pro-business agenda, including promises of deregulation and tax cuts, which could support a positive outlook for equities.

Dollar Index:

The USD Dollar index surged to 108.5 on Tuesday against a basket of currencies, recovering some losses after a pullback in the previous session. The dollar gained momentum due to the 25% tariff plan on Canada and Mexico. It needs to be noted that Dollar has performed strongly since Trump won the US election since his "America First" policies and pro-growth stance is expected to drive inflation up which could make it difficult for the US Federal Reserve to cut further rates in 2025 ahead. Fed has already announced that they expect fewer rate cuts in the current year.

Meanwhile, in India, the rupee traded at 86.3 per dollar, appreciating against the US currency from the previous day's print of 86.55 per dollar. The rupee strengthened mildly due to the dullness of the dollar after Trump did not announce stringent tariff hikes on his first day 1 at the White House. However, the rupee was still under pressure and above 86 levels, while being closer to its record low. The dollar's movement with anticipation of Trump's policies is likely to be a key driver of the local currency.

Spot Gold:

With expectations of spur in inflation due to Trump's policies, spot gold rose by 0.5% to trade at $2,724 an ounce. Trading Economics data said, fiscal and trade policy uncertainty, coupled with the abandonment of renewable energy commitments and the Paris Accord, supports safe-haven demand. A weaker dollar following Trump's inauguration further underpins gold, while expectations of limited Fed rate hikes amid soft U.S. economic data add to its allure.

What To Expect From Dow Jones, S&P 500 and Nasdaq Composite on January 21?

Reuters quoted Jack Ablin, chief investment officer at Cresset Capital who said, "Most of what he has been talking about will help spur growth and corporate profits." He added, "But many will come at a cost. We will need to see a lot of earnings growth to make up for even a minor increase in interest rates that could follow higher tariffs."

Last week, major indices like Dow Jones, S&P 500 and Nasdaq Composite surged by 2.5% to 3.7%. DJIA outperformed its counterparts with gains of nearly 4%, making it the largest weekly performance since November last year. A softer-than-expected inflation data heightened the probability of a rate cut from the US Federal Reserve ahead, which dampened the mood in the dollar and yields. Noteworthily, as per the data, stocks linked to cryptocurrencies, Trump-related businesses, and major tech firms were among the week's top performers.

Also, the data revealed that the 10-year US Treasury yield dropped below 4.6% on Friday, declining by 25bps since hitting its 14-month high on Tuesday amid expectations that the Fed will ease monetary restrictions this year.

Prashanth Tapse, Senior VP (Research), Mehta Equities said, this Tuesday morning, Gift Nifty is in the green as traders reacted positively to US President Donald Trump's inauguration speech, where he promised a 'new golden age' without confirming immediate tariffs. The improving risk sentiment could push Nifty towards 23,500, supported by declining WTI oil prices at $77.5 per barrel and a weakening US Dollar index.