By Suzanne McGee and Saeed Azhar
NEW YORK (Reuters) -Investors welcomed Donald Trump’s second inauguration on Monday, saying it heralded a pro-business agenda and that they were relieved that protectionist trade policies may be implemented more methodically than many had feared.
Trump enters office with an ambitious agenda spanning trade reform, immigration crackdowns, tax cuts and loosening cryptocurrency regulation. On Monday he pledged to bolster the U.S. oil, gas and power industries and repeated his intention to collect “massive amounts” of tariffs.
However, investment managers who are adjusting portfolios across asset classes said they were relieved the speech fell short of more dramatic action.
“So far, we have seen a lot of threatened action, but not yet any follow through” in the form of action on immediate imposition of tariffs on key trading partners, said Alex Morris, CEO of f/M Investments.
One concern among some market participants had been aggressive action on tariffs on the first day. Trump will issue a broad trade memo on Monday that directs federal agencies to evaluate U.S. trade relationships with China, Canada and Mexico but stops short of imposing new tariffs on his first day in office.
“The big question on investors’ minds right now is going to be ‘how’ — how will he cut costs and lower inflation and lower interest rates,” said Josh Strange, president of Good Life of NoVA, a financial advisory firm. He said the inaugural speech lacked specifics on any tariffs or immigration.
Stock futures traded higher following the inauguration, with contracts on the Standard & Poor’s 500 index up around 0.3%. U.S. exchanges were closed for trading in honor of the Martin Luther King Jr. holiday.
The dollar fell as the Trump administration signaled that new tariffs would not be imposed on the new president’s first day in office.
“There is a relief rally in foreign currencies right now,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. The peso gained slightly against the dollar in the absence of any specific new tariff announcements.
Still, there is the potential that Trump’s tariff plans could further fan inflation fears that pressure bond and stock prices, while efforts to tighten immigration controls could also reverberate through those markets. Moves to ease regulation have lifted bank stocks and sent cryptocurrencies soaring.
As they reported surging profits, Wall Street CEOs told investors the incoming U.S. administration would be business-friendly and good for banks.
Alongside changes on trade, the cryptocurrency industry expects Trump to fulfill his “crypto president” campaign promises by creating a federal bitcoin stockpile, expanding bank access and creating a crypto council, Reuters previously reported.
Trump also launched a branded cryptocurrency which soared on Monday to more than $10 billion in market value, raising ethics questions.
In the aftermath of Trump’s speech, the price of bitcoin remained below its overnight low of $107,000, at about $104,000. The president did not make any specific pronouncements regarding cryptocurrency in his inaugural address or in informal remarks made to supporters in an overflow crowd later.
During the first year of Trump’s first administration, the S&P 500 rose 19.4%, following a 5% rally in his first 100 days in the Oval Office. During the entirety of Trump’s first term, the S&P 500 rose nearly 68%, but markets saw bouts of volatility, stemming in part from a trade war Trump fought with China.
Following Trump’s last inaugural address, in January 2017, the S&P 500 ended up 0.3% on the day. Due to the holiday, the trading reaction this time will not be evident until Tuesday.
Some investors said they were still waiting to see how the first few days of the presidency took shape.
“President Donald Trump returned to the White House today with pen already in hand to sign what is expected to be close to 100 executive orders,” said Paul Ashworth, Chief North America Economist at Capital Economics. “That flurry of executive action will set the tone on what we can expect from his administration in a wide range of policy areas, particularly immigration and energy.”
