OPENING CALL

Stock futures rose and bond yields fell when, contrary to his previous pledges, President Donald Trump didn't slap a range of tariffs on goods coming into the country immediately after his inauguration.

Although he did later allude to the possibility of tariffs on Mexico and Canada at the start of February, traders appear to be treating those comments as off the cuff and not yet concrete policy--for now.

The lack of tariffs "raised hopes that Trump would initially try and reach a deal with U.S. trade partners, with tariffs as a potential point of leverage, rather than something to be used immediately," Deutsche Bank said.

However, Capital Economics is working on the assumption that Trump will levy a 10% universal tariff with a 60% tariff on imports from China sometime in the second quarter of this year.

"Some of Trump's closest advisers would clearly like to limit the scope and size of those tariffs, but we suspect that Trump himself remains steadfast in his protectionist intentions and he will eventually win the internal debate."

Stocks to Watch:

Apple fell premarket after analysts at Jefferies downgraded its rating and reduced its price target on the stock.

Meta Platforms, Alphabet were up despite Trump saying he would delay the ban of TikTok.

Moderna rose 3.9%, On Friday it was awarded funding to accelerate development of its bird flu vaccine.

Tesla rose, even as Trump vowed to eliminate EPA rules requiring auto makers to sell all-battery electric vehicles to avoid hefty emissions-related fines. Rivian Automotive and Lucid Group were down.

Walgreens Boots Alliance fell 7.4% after being sued by the DOJ for allegedly helping to fuel the opioid crisis.

Watch For:

Canada CPI; Earnings from Netflix, Charles Schwab, 3M, Capital One Financial, D.R. Horton, United Airlines, and Seagate Technology.

Today's Headlines/Must Reads:

- Trump Takes Office Determined to Bend Government to His Singular Will

- The U.S. Government Has a Landlord, and Trump Isn't a Fan

- Make America Cheap Again

MARKET WRAPS

Forex:

The dollar could depreciate if the the implementation of proposed policies such as tariffs--that are expected to be dollar supportive--are delayed, Rabobank said.

"The market has priced in a lot of dollar positive news since October."

Further "flurries of profit-taking" in the dollar can't be ruled out if Trump "delays the implementation of inflationary policies such as tariffs."

Schroders also said the dollar could swing before policy on trade is confirmed by the new administration adding that at the end of 2024, multiple factors combined to send the currency higher.

"These factors included expectations of higher interest rates in the U.S. relative to other major central banks, as well as higher U.S. growth compared to other regions."

Pepperstone said the dollar's good days aren't over yet, and that it remained a firm believer in the dollar bull case, adding phases of weakness give investors an opportunity to buy.

Bonds:

DHF Capital said a strict trade policy and prospects that further U.S. interest-rate cuts could be delayed or might not happen at all could lift both U.S. yields and the dollar.

Danske Bank said Treasury yields have the scope to decline further once more clarity on Trump's policies emerges.

"While the risk associated with Trump's policy package persists, we believe that long-term U.S. yields have further room to decline."

There is ample scope to factor in additional U.S. rate cuts in 2025-26, should inflation data continue to soften, it added.

MFS Investment Management said the risk to U.S. rates was no longer substantially skewed to the downside.

"It is fair to say that the tactical case for being long duration is not as strong as it used to be just a few months ago."

The majority of MFS IM's fixed income portfolio managers have revised their market-rate projections upwards, and MFS IM's quant investment team rate-forecast takes a neutral view on market rates.

This supports the notion that caution is probably needed on duration positioning in the period ahead, it added.

UOB said the yield on 10-year Treasurys could fall below support at 4.505%, according to the chart.

Energy:

Crude fell after Trump laid out a plan to boost oil-and-gas production that also included rolling back drilling restrictions in the Arctic and lifting a freeze on LNG export permitting.

Traders are "trying to connect all the dots in Trump's inaugural speech and what they overall mean for supply and demand," Saxo said.

"Potential tariffs on Canada and Mexico may lower supply to the U.S. and boost prices, while incentives to boost domestic production may counter that fear."

DNB Markets analysts cacluated that restocking the Strategic Petroleum Reserve could take seven years.

Metals:

As expectations for tariffs and other changes were pushed back, gold investors rushed to lock in gains, Phillip Nova said.

Tariffs--and the risk-aversion they trigger--will drive bullish momentum in gold, it said, adding that given how the events stirred prices, to say that volatility is likely in the coming weeks is an understatement.

Gold Chart

Comex gold futures' bullish bias is still perceived as valid, based on the chart , RHB Retail Research said, adding that following consolidation, the precious metal should resume an uptrend toward $2,800 and that immediate support is pegged at $2,700.00.

Base Metals

LME three-month copper and aluminum prices slid.

Tariff policy will be key to global base metal drivers over the next year, with more clarity expected from Trump soon, Citi said, adding that existing demand is unsustainable given expected tariff headwinds, including payback for front-loading demand ahead of tariffs.


TODAY'S TOP HEADLINES


Jeep Maker Stellantis Brings Back American Classics After CEO Exit

Jeep is reviving its Cherokee-sized SUV. Dodge is bringing back the gas-engine version of its Charger muscle car. And Ram is hitting pause on its all-electric pickup truck.

In the weeks since the departure of former CEO Carlos Tavares, executives at global automaker Stellantis have been moving swiftly to turn around the U.S. operations, employing a series of changes to jump-start sales again.


Orsted Shares Plunge on $1.7 Billion Impairment

Orsted shares sank to the bottom of the Stoxx Europe 600 index Tuesday after the company announced a $1.7 billion fourth-quarter impairment amid higher costs at its U.S. Sunrise Wind project and increased financing costs.

The Danish renewable-energy company said late Monday that its Sunrise Wind project off the coast of New York is navigating supply chain and construction challenges, which have resulted in delays and increased costs and led to an impairment of 4.3 billion kroner ($600.3 million).


Generali and Natixis Ink Asset Management Joint Venture

Italy's Generali and the owner of France's Natixis are set to combine their asset management operations to create a European giant overlooking 1.9 trillion euros ($1.979 trillion) in assets.

The Italian insurer and French retail bank Groupe BPCE signed a preliminary deal underpinned by 15-year contracts to form a joint venture they will each own a 50% of.


Dollar, Bitcoin, Treasury Yields Ease as Investors Weigh Trump's Approach to Tariffs

The dollar fell against a basket of currencies, the yield on the 10-year Treasury eased and bitcoin pulled back from recent record highs in the wake of President Donald Trump's inaugural speech, with the absence of any immediate imposition of broad tariffs providing some relief to equities.

Market direction for some currencies was volatile, as investors adjusted their response to the new administration. Earlier, the dollar rose against the Canadian dollar and Mexican peso after President Trump said he would place 25% tariffs on imports from those countries on Feb. 1.


Trump Pardons Nearly All 1,500 Jan. 6 Rioters

WASHINGTON-President Trump pardoned Monday nearly all of the 1,500 people charged in connection with the Jan. 6, 2021, attack on the Capitol, hours after outgoing President Joe Biden immunized from prosecution family members and other potential targets of the incoming administration.

Trump's sweeping clemency delivered on his polarizing campaign pledge to pardon supporters who joined in what federal judges and prosecutors have called an attack on American democracy.


Write to clare.kinloch@wsj.com

TODAY IN CANADA

Earnings:

- Nothing major scheduled

Economic Indicators (ET):

0830 Dec CPI

Stocks to Watch:

- No items published

Other News:

Canada's Tariff Anxiety Returns After Trump's Oval Office Comments


Expected Major Events for Tuesday

07:00/UK: Dec UK monthly unemployment figures

09:30/UK: Dec Monthly Insolvency statistics

10:05/GER: Jan ZEW Indicator of Economic Sentiment

13:30/CAN: Dec CPI

All times in GMT. Powered by Kantar Media and Dow Jones.


Expected Earnings for Tuesday

3M Co (MMM) is expected to report $1.67 for 4Q.

AmeriServ Financial Inc (ASRV) is expected to report for 4Q.

Bank First Corp (BFC) is expected to report $1.58 for 4Q.

Capital City Bank Group Inc (CCBG) is expected to report $0.72 for 4Q.

Charles Schwab Corp (SCHW) is expected to report $0.85 for 4Q.

Community Financial System Inc (CBU) is expected to report $0.90 for 4Q.

DR Horton Inc (DHI) is expected to report $2.35 for 1Q.

Eagle Bancorp Montana (EBMT) is expected to report $0.29 for 4Q.

FB Financial Corp (FBK) is expected to report $0.84 for 4Q.

Fifth Third Bancorp (FITB) is expected to report $0.88 for 4Q.

Finch Therapeutics Group Inc (FNCH) is expected to report for 3Q.

Forestar Group Inc (FOR) is expected to report $0.63 for 1Q.

Fulton Financial Corp (FULT) is expected to report $0.38 for 4Q.

Gencor Industries Inc (GENC) is expected to report for 4Q.

Greene County Bancorp Inc (GCBC) is expected to report for 2Q.

(MORE TO FOLLOW) Dow Jones Newswires

01-21-25 0622ET