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Global financial markets have responded in significant ways since Donald Trump returned to the White House. His policy decisions on tariffs, federal spending, and international relations have influenced stocks, currencies, commodities, and cryptocurrencies. While some markets have soared, others have faced challenges.

US Dollar Weakens After Early Gains

The US dollar initially surged after Trump won the election on November 5. However, since his inauguration on January 20, the dollar index (DXY) has dropped 2.2%, falling from over 109 to 107 as of February 19.

Several factors contributed to this decline. Before Trump took office, markets had already priced in a strong dollar, leading to profit-taking. Delays in tariffs on Canada and Mexico, alongside new levies on steel and aluminum, played a role. Although Trump imposed a 10% tariff on Chinese goods, the major 25% tariffs on other imports will not take effect until April. This delay eased inflation concerns, putting downward pressure on the dollar.

At the same time, the Federal Reserve hinted at slowing down its balance sheet reductions due to debt ceiling constraints. This suggests the central bank may hold on to more government debt, which can lower borrowing costs but weaken the dollar. US bond yields have also dropped, reinforcing the dollar’s downward trend.

Stock Markets Reach Record Highs

Global stock markets have surged since Trump’s inauguration, with European stocks leading the gains. The delay in imposing major tariffs helped boost investor confidence, while expectations of lower global interest rates, excitement around artificial intelligence, and strong corporate earnings also fueled the rally.

European markets, in particular, have seen broad-based gains. Investors expect the European Central Bank (ECB) to continue cutting interest rates, and some analysts believe the EU may introduce special funds for defense spending. Trump’s policies have also indirectly supported European financial, technology, and industrial stocks. His push for $500 billion in AI infrastructure investment, banking deregulation efforts, and demands for increased European defense spending have contributed to these gains.

Gold Hits Record Highs

Gold has been one of the best-performing assets since Trump took office. The price of gold futures has risen by 8% as investors seek safe-haven assets amid global economic uncertainty. A weaker US dollar has also made gold more attractive, further driving demand.

Another factor behind gold’s rise is Trump’s approach to government spending. His administration, with input from Elon Musk, has cut thousands of federal jobs. Some analysts believe this could increase unemployment and weaken consumer spending, creating concerns about inflation and long-term economic stability. These fears have led investors to buy gold as a hedge against uncertainty.

Oil Prices Fall Amid Trump’s Energy Push

Crude oil prices have declined since Trump’s return to office. Brent futures have fallen 6.6%, while WTI crude has dropped 7.8%. The price decline comes as Trump actively pushes for lower energy costs, using the slogan “Drill, baby, drill” to encourage increased oil production.

His administration has also engaged in peace talks with Russia, which may involve easing sanctions on its oil exports. Trump argues that lowering energy prices could help offset the costs of new tariffs on imported goods. However, it remains uncertain whether this strategy will be successful in the long term.

Bitcoin Struggles Despite Trump’s Pro-Crypto Stance

Bitcoin has dropped 4% since Trump’s inauguration. While many investors had expected Trump to take a favorable stance on cryptocurrencies, his administration has yet to introduce concrete policies to support the market.

So far, Trump has only announced plans to evaluate the creation of a “national digital asset stockpile.” However, he has not provided details about a potential Bitcoin reserve or other measures to boost crypto adoption. This lack of clarity has disappointed investors, leading to a decline in Bitcoin’s value.

Market Outlook: What’s Next?

As Trump moves forward with his policies, markets will continue to react. Investors are watching closely to see how his tariff strategy unfolds and whether he follows through on additional economic measures. The Federal Reserve’s approach to interest rates will also play a key role in shaping future market movements.

The next few months will be critical in determining whether Trump’s policies can sustain the stock market rally, stabilize the dollar, and boost economic growth. Investors will need to stay informed as events unfold.

For more updates on financial markets and economic policies, visit Financial Mirror.