Since Donald Trump’s inauguration, global financial markets have experienced notable shifts. These changes reflect how Trump’s policy decisions are influencing major asset classes and investor sentiment. From the fluctuating value of the US dollar to the performance of stock markets, the landscape has seen a variety of reactions.

The US Dollar’s Decline

When Trump took office, the US dollar saw a significant surge, driven by optimism about his economic policies. The dollar index (DXY) reached a high in early January, reflecting the market’s expectation of a strong US economy. However, since Trump’s inauguration on January 20, 2025, the dollar has declined by 2.2%, dropping from above 109 to 107 by February 19.

Several factors contributed to the weakening of the dollar. First, the markets had already priced in expectations of a strong dollar, leading to profit-taking. Additionally, Trump’s decision to delay tariffs on key trade partners, including Mexico and Canada, further reduced the dollar’s appeal. While he introduced tariffs on steel and aluminum, with potential extensions to other industries like carmakers, chipmakers, and pharmaceuticals, these levies will not take effect until April. This delay dampened the immediate impact of these policies on the dollar.

Another key factor behind the dollar’s decline was reduced inflation concerns. US government bond yields have fallen as investors expect the Federal Reserve to slow down its efforts to reduce its balance sheet. Debt ceiling constraints are also raising concerns about the sustainability of US government debt. This has led to higher borrowing costs, which put additional pressure on the dollar.

Global Stock Markets Reach Record Highs

While the US dollar has struggled, global stock markets have largely been on an upward trajectory. Particularly in Europe, stocks have surged, driven by several key factors. One significant contributor has been the delay in tariffs, which has boosted investor confidence. Additionally, expectations of lower global interest rates and strong corporate earnings, particularly in the technology sector, have also played a major role in the rally.

Trump’s peace talks with Russia have had a positive effect on European defense stocks. Investors are optimistic that these negotiations could lead to reduced tensions and a more stable geopolitical environment. European stocks have seen broad-based gains over the past month, with sectors such as finance, technology, and industry benefiting from Trump’s policies.

Trump’s $500 billion (€479 billion) investment plan for US AI infrastructure has had a ripple effect across Europe. His push for deregulation in the banking sector and efforts to boost EU defense spending have indirectly supported the performance of European financial, technology, and industrial stocks. These sectors are now benefitting from both Trump’s policy moves and the broader global economic trends he’s helping shape.

Gold Hits All-Time High

Gold has been another standout asset class, rising 8% since Trump’s inauguration. Growing concerns about a potential global trade war and slowing economic growth have driven demand for safe-haven assets like gold. As the US dollar weakened, gold saw additional upward momentum.

The economic uncertainty following Trump’s policies, including the reduction of federal jobs, has raised concerns about rising unemployment and weaker consumer spending. This uncertainty has further fueled demand for gold as a hedge against financial instability.

Kyle Rodd, a senior market analyst at Capital.com, noted that the disruptive effects of Trump’s policies could lead to higher inflation risks in the long term. The cuts to federal jobs, especially with the involvement of tech figures like Elon Musk, have created significant ripple effects. These job cuts could hurt consumer confidence and spending, potentially impacting broader economic growth in the future.

Oil Prices and Energy Markets

Crude oil prices have been on a downward trend since Trump’s inauguration. Brent futures have fallen by 6.6%, while WTI futures have dropped by 7.8%. This aligns with Trump’s push to lower global crude prices by encouraging oil producers to increase output. His “Drill, baby, drill” mantra has resonated with some sectors of the economy, particularly those that rely on cheaper energy prices.

Trump’s peace talks with Russia have also contributed to the decline in oil prices. If these talks result in reduced sanctions on Russia’s oil exports, it could lead to an increase in global oil supply, further driving down prices. Trump has argued that lower energy costs will help offset rising prices caused by higher tariffs. However, the success of this strategy remains uncertain as global oil markets are highly complex and influenced by multiple factors.

Bitcoin and Cryptocurrency Market Response

The cryptocurrency market, particularly Bitcoin, has not reacted as positively to Trump’s policies. Since his inauguration, Bitcoin prices have declined by 4%. The initial enthusiasm surrounding Trump’s promise to make America a “crypto capital” has faded due to the lack of concrete policy measures.

While Trump has called for a review to determine whether to establish a “national digital asset stockpile,” he has not yet committed to a Bitcoin reserve. This lack of clarity has led to disappointment among crypto investors, who were hoping for more decisive action in favor of the cryptocurrency market. As a result, Bitcoin’s performance has remained relatively flat, with little movement in either direction.

Long-Term Impact of Trump’s Policies

Trump’s impact on the global financial landscape is still unfolding. His policies have had mixed effects, strengthening certain asset classes while putting pressure on others. While stock markets have reached record highs and gold has flourished, the US dollar has weakened, and oil prices have dropped. Bitcoin has experienced a lack of momentum as crypto investors await further clarity on Trump’s stance on digital assets.

Looking ahead, investors will continue to watch for any shifts in Trump’s policies, particularly concerning tariffs, trade relations, and fiscal management. His moves on the international stage, such as peace talks with Russia, will likely have significant consequences for both global markets and specific sectors, such as defense and energy.

The financial markets under Trump’s presidency have seen a mix of rising stock prices, a weaker US dollar, and fluctuating commodities. As the US dollar continues to lose ground and gold rises, it’s clear that Trump’s policies are having a wide-reaching impact on global markets. How these shifts play out over the coming months will depend on Trump’s future moves on trade, the economy, and international relations.

For more updates on financial markets and their reaction to Trump’s policies, visit Wall Street Storys.