Market snapshot: a defining moment as Trump to be sworn in 

US markets registered their first weekly gain this year, ahead of what is likely to be a defining moment when the new President is inaugurated later today.

Investors will not have the luxury of being able to react immediately, with US markets closed for Martin Luther King Day, but the expected slew of executive orders which are likely to be announced within hours sets up an interesting start to trading tomorrow.

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Particular attention will be given to some of the measures promised during the election campaign, such as the potentially inflationary effects of tax cuts and tariffs in a show of American exceptionalism. The so-called “Trump trades”, which have ranged across the likes of the financials and smaller cap stocks, could be in sharp focus.

In the meantime, softer inflation releases at both the consumer and producer levels provided some solace for stocks, as the possibility of interest rate cuts this year came back to the table. A return to the risk-on approach pushed the mega cap technology stocks higher, with gains of over 3% for both NVIDIA Corp (NASDAQ:NVDA) and Tesla Inc (NASDAQ:TSLA).

Meanwhile, the banks helped settle any initial investor nerves for the year with a generally robust set of numbers which lifted the likes of The Goldman Sachs Group Inc (NYSE:GS) and Citigroup Inc (NYSE:C) some 12% higher for the week. The weekly strength has left the Dow Jones ahead by 2.2% so far in January, with gains of 2% and 1.7% for the S&P500 and Nasdaq respectively.

Quite apart from the inevitable political noise, this week will also see economic releases in the form of existing home sales, initial jobless claims and perhaps most tellingly consumer sentiment. The Federal Reserve is not expected to make any comments ahead of its meeting next week, while on the corporate calendar the earnings season continues with updates from the likes of Netflix Inc (NASDAQ:NFLX), Johnson & Johnson (NYSE:JNJ), Procter & Gamble Co (NYSE:PG) and American Express Co (NYSE:AXP).

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Asian markets were generally stronger ahead of the positive end to the week on Wall Street, with China remaining in the investor spotlight. The central bank left lending rates unchanged, a deadline was extended for beleaguered property developer Country Garden and sentiment also improved following reports that the US and China had held talks aiming for a more conciliatory tone between the two countries.

In Japan, the Nikkei edged higher ahead of the interest rate decision later in the week, where the possibility of a further hike remains a growing possibility. The speculation read across to some yen strength, leading to the usual double-edged sword of having opposite effects on the country’s importers and exporters.

In the UK, the FTSE100 struggled to build on the record closing high achieved on Friday, with some weakness in the dollar strengthening sterling and providing something of a headwind across an index largely focused on overseas earnings.

Broker notes were the cause of the main stock movements in early trade, to the benefit of National Grid (LSE:NG.), Barclays (LSE:BARC) and Spirax Group (LSE:SPX) and to the detriment of Smiths Group (LSE:SMIN). Entain (LSE:ENT) shares slipped following a report that KPMG was being investigated following its audit of the group for the 2022 financial year, adding to pressure which has seen the shares decline by 31% over the last year.

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Even so, the premier index remains a pacesetter in the year to date with a gain of 4.2%, while the more domestically exposed FTSE250 posted a marginal gain in opening exchanges to recoup its January losses and return to the level seen at the end of December.

With a torrid few months expected across the entirety of the UK economy in the months to come, the index may struggle to make any meaningful progress unless the potential damage can somehow be avoided.