On Monday, US President Trump was re-elected and sworn into office. In his inaugural address, he emphasised priorities such as strengthening immigration and border security, expanding the United States’ presence in space, and introducing tariffs to protect American businesses. Following the lengthy ceremony, markets reacted with mixed but largely steady movements. The Mexican peso and Canadian dollar predictably declined against the US dollar after Trump announced plans to impose 25% tariffs on Canada and Mexico starting in February. Despite this, the broader markets held steady watching for developments in Trump’s first days in office.
European investors, meanwhile, displayed signs of caution, factoring in a new risk premium for EU-made products. Although Trump has refrained from announcing widespread tariffs, he has ordered a review of US trade deals. Investors are closely monitoring his executive orders on topics such as energy and immigration, while awaiting his first move on trade policy.
Data revealed UK unemployment rate rose to 4.4% in the three months to November, up from 4.3% in the previous three months to October. The complete impact of the recent adjustments to employer National Insurance and the National Minimum Wage, announced during the Budget, is not anticipated to become fully apparent until later in the year. However, these changes are thought to be a key factor behind the slight increase in unemployment, as businesses may have scaled back hiring in response to Rachel Reeves’s newly proposed fiscal rules.
