European Stocks Edge Higher as Trump’s Inauguration Takes Center Stage
European stock markets posted modest gains on Monday, with activity expected to be subdued ahead of U.S. President-elect Donald Trump’s inauguration later in the day.
As of 03:05 ET (08:05 GMT), Germany’s DAX index rose by 0.1%, France’s CAC 40 added 0.3%, and the UK’s FTSE 100 was up 0.1%.
Focus Shifts to Trump’s Inauguration
The spotlight on Monday is firmly on Donald Trump’s inauguration as the 47th U.S. president. Trading ranges and volumes are likely to remain limited, especially with U.S. markets closed in observance of Martin Luther King Jr. Day.
This marks Trump’s second term in office. Equities rallied following his November election victory as investors anticipated policies favoring deregulation and tax cuts.
However, uncertainty looms after reports from Bloomberg suggested Trump is preparing to declare a national emergency, granting him expanded powers to advance his agenda. He has pledged to sign nearly 100 executive orders shortly after taking office. At a rally on Sunday, Trump reiterated his plans to deport immigrants, reduce regulations, and expand energy production.
Investors are also cautious about the potential for Trump to announce increased trade tariffs targeting China and other major economies, including the European Union.
Davos Summit Begins in Europe
Meanwhile, in Europe, the World Economic Forum kicks off this week in Davos, Switzerland, gathering political and business leaders to discuss global economic growth and other pressing issues.
Trump is scheduled to address the forum via video link on Wednesday, while notable attendees include European Central Bank President Christine Lagarde, European Commission President Ursula von der Leyen, UK Chancellor Rachel Reeves, and China’s Vice Premier Ding Xuexiang.
German PPI Misses Expectations
German producer prices rose by 0.8% year-on-year in December, falling short of the anticipated 1.1% increase.
The European Central Bank has lowered interest rates four times since June and is expected to continue easing monetary policy over the next six months. This comes as inflation in the eurozone has dropped from double digits in late 2022 to just above the ECB’s 2% target.
Meanwhile, the People’s Bank of China held its benchmark loan prime rate steady on Monday, keeping both rates at record lows as anticipated. Beijing appears to be waiting for more clarity on U.S. trade tariff plans under President Donald Trump before making significant moves.
Limited Corporate Earnings
On the corporate front, Monday brings a quiet day for European earnings. The reporting season began in the U.S. last week, with major banks posting strong profits driven by robust deal-making activity and gains in equity markets, which bolstered trading revenues.
Oil Prices Edge Lower
Oil prices dipped slightly on Monday as traders reduced risk exposure ahead of Donald Trump’s inauguration.
As of 03:05 ET, U.S. crude futures (WTI) were down 0.1% at $77.33 per barrel, while Brent crude fell 0.1% to $80.68 per barrel.
Trump’s inauguration later Monday is expected to bring a flurry of policy announcements. These could include easing restrictions on Russia’s energy sector in exchange for progress toward ending the war in Ukraine. Oil prices have climbed 10% this month, driven by concerns over potential Western sanctions on Russian crude supplies.
