Macro Intelligence: market trends under Trump 2.0
Markets brace for volatility as Trump acts on campaign pledges with potential executive orders, while global stocks see strong gains since the US election.
Written by Juliette Saly
Trump 2.0
In this week’s edition of IG Macro Intelligence, we examine the inauguration of Donald Trump and the market risks and opportunities ahead under Trump 2.0.
Trump bump
Donald Trump became the 47th President of the United States (US) on Monday, 20 January 2025. As this marks his second and final term, market participants are bracing for volatility.
Shane Oliver from AMP Capital told ausbiz the only certainty is uncertainty.
Trump immediately invoked emergency powers as part of his plan to unleash domestic energy production. He is also expected to issue a series of executive orders on tariffs, immigration, and regulatory reform.
Peter McGuire from XM says that means potential further volatility ahead for the crude oil market.
Global optimism rises
In the week leading up to the inauguration, global stocks experienced their best performance since the US election in November.
Optimism was boosted after Trump held a phone call with Chinese President Xi Jinping, where the leaders discussed trade and the outlook for TikTok. The proposed US ban on the Chinese app has been suspended for three months.
Global stocks chart
Big promises, small (cap) opportunities
Many analysts perceive Trump’s ‘America First’ policies will deliver an ideal climate for US small-cap stocks.
The Russell 2000 of US small-cap stocks has traded fairly range-bound so far in 2025:
- The index is up 15% over the past year
- The 15% gain is almost half of the 28% gain witnessed by the technology-heavy Nasdaq 100 during the same period
- The Russell 2000's gain is less than the 23% gain achieved by the broader S&P 500.
US small caps chart
According to Forbes, Wall Street analysts project double-digit earnings growth for the S&P 500 in 2025, while consensus estimates for the Russell 2000 anticipate an impressive income growth of nearly 40%.
US market entry for Australians
The Savana US Small Caps Active Exchange Traded Fund (ASX: SVNP) launched on 7 November to provide exposure to the US small-cap market for Australian investors. Samuel Atkinson from Savana Asset Management told ausbiz Trump’s inauguration is the ‘trigger’ event they’ve been waiting for.
Meanwhile, Dean Fergie from Cyan Investment Management says Australian fund managers can also benefit.
Trump trade
Stuart Roberts from Stocks Down Under sees Lynas, the rare earths miner, as a potential stock winner. Lyna's shares are up around 18% over the past 12 months, a sign of its strong performance.
ASX Tradewatch data shows Lynas is exhibiting a long-term bullish trend supported by multiple indicators. Notably, the stock's 5-day moving average (MA) is positioned above the 50-day MA, and the 200-day MA continues to rise, indicating sustained growth potential.
Lynas daily chart
Most brokers suggest holding the stock, according to Refinitiv, with an average price target of $7.55, suggesting the stock has a further 10% to run.
Following its most recent quarterly update, opinions diverge: Citi put a 'sell' rating on LYC with a target price of $5.50, whereas UBS has a 'buy' with a price target of $7.95.
Lynas recommendation chart
And of course, cryptocurrencies are expected to be in focus with Trump expected to promote digital asset adoption. 'It's going to be a very exciting year for crypto,' predicted Josh Gilbert from eToro.
Bitcoin's price surged to a record high ahead of Trump's inauguration, following a shakeup in the cryptocurrency market as Trump and his wife Melania launched competing meme coins.
Bitcoin chart
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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