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What impact could Trump have on world markets?

Today, Donald Trump will become the 47th president of the United States, and investors will be keeping a close eye on his inauguration speech for signs of what's to come under his leadership. 

His unpredictable nature has the potential to shake markets around the world, and his swearing in ceremony could kick-start a more volatile period. 

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said some of the turmoil that has already been seen is likely to continue as speculation swirls about Trump's trade policies. 

"There's inevitably a lot of focus on what the impact could be for the global economy when higher tariffs are introduced. UK investors should brace for some volatile patterns of trading on the financial markets," she warned. 

"However, it's important to remember that investing takes endurance and patience and that the stock market has historically risen over the long term." 

Trump's plans raise inflationary risks around the world

US exporters are likely to be hit by higher tit-for-tat duties in return if Trump introduces widespread tariffs, Streeter added. 

She said this could prove to be inflationary, as higher tariffs feed through to higher prices for goods in American shops.  

"This, in turn, may add to clamour for higher wages. Already, concerns that this will drastically limit the Federal Reserve's capacity to bring reduce interest rate has rattled bond markets, pushing up government borrowing costs," she explained. 

This might see the dollar strengthened even further, which could import inflation to other countries - including the UK. 

"Many imports used in an array of goods which are bought on wholesale markets are priced in dollars, which will be more expensive if the greenback takes on more muscle," Streeter said. 

"This could push up the prices of an array of some products on the shelves. If countries hit back with tariffs on imports from the US, that could also push up consumer prices." 

However, she said the risks of that happening in the UK were low, particularly given that Britain's trade with America is focused on services, where tariffs are unlikely to be imposed.

UK interest rates could be impacted

The Bank of England will also be assessing the potential inflationary risks of a Trump presidency. 

In recent weeks, we have seen government borrowing costs rise due to spikes in gilt yields. 

But, Streeter said that if Chancellor Rachel Reeves is forced to bring in spending cuts or further tax rises, or if there are other "detrimental effects"of Trump's tariffs, it may prompt the Bank of England to cut interest rates a "little faster this year, than financial markets are predicting". 

She added that there was also a risk that mortgage rates could "rise a little further" before falling in line with the Bank's interest rate cuts. 

"The better savings rates being offered may also hang around for a big longer, but there are also set to disappear once policymakers vote for a rate reduction, so it's worth locking into a good deal sooner rather than later," she said. 

How Trump could help carmakers and the financial sector

Streeter said Trump's tariffs may help manufacturers focused on the US domestic market, such as carmakers General Motors and Ford. 

"Tariffs on big Chinese e-commerce players would also be a benefit to Amazon but also retailers with a big online presence like Walmart. Smaller US companies may also be beneficiaries, as they benefit from US supply chains being beefed up," she explained. 

"If the Fed, as expected, goes slow with rate cuts, the elevated interest rate environment may prove beneficial to the US financial sector, as it would boost net-interest margins, and bring in more money, with banks like Wells Fargo, Bank of America, as well as smaller lenders potential beneficiaries." 

'Drill baby drill' could bring oil prices down 

Trump has vowed to "drill baby, drill" during his time in office, which essentially means boosting production of fossil fuels. 

"Prices at the pumps risk been creeping up again after gains in crude oil due to fresh supply concerns prompted tougher sanctions on Russia," said Streeter.

"However, if the US produces more oil, it would boost supplies on world markets and potentially help lower prices. This is unlikely to happen in the short term, and energy companies may still be cautious about ramping up production, keen to ensure there’s the right balance of oil on world markets to stay profitable."

Gold prices set to stay elevated

One investment that Streeter said remains strong during times of uncertainty is gold - and it had a "stellar run in 2024". 

"While returns may not continue at this pace, the uncertain outlook, combined with increased buying from central banks, particularly in emerging markets, means that the commodity could continue to enjoy support," she said. 

Bond prices under pressure

When it comes to bond prices, Streeter's advice for investors was not to panic. 

"Investment objectives should usually focus on longer-term objectives, and shorter-term volatility is to be expected," she said.

"However, it's worth investors reviewing where they're invested and whether the split between shares and bonds is still what they want, given their objectives." 

Businesses giving staff days off, treats and £1,000 interest free loans to tackle Blue Monday

Businesses are giving staff days off, gift vouchers or access to interest free loans to help them cope with "Blue Monday". 

Today - the third Monday of January - is considered to be the most depressing day of the year, with people feeling the pinch of an extra long stretch between pay day, culminating with an end to the festive season and cold weather. 

The term was first coined by psychologist Dr Cliff Arnall in 2004 after he supposedly devised the formula for the bleakest day to help a travel company sell holidays. 

While many psychologists consider there to be no scientific credibility to support it, the term has stuck ever since. 

Data provided to Money by WorldPay shows travel spending increased by 37% on Blue Monday last year, compared to the week prior. 

The total value of online payments also increased, rising by 7%. 

Pete Wickes, general manager of EMEA enterprise at Worldpay, said: "While retail events like Black Friday may be better known, Blue Monday is gaining traction as a notable date in the calendar for sectors like the travel industry.

"Marketed well, for merchants these events are opportunities to kick-start the year, while for shoppers they represent a way to beat the January blues with a little discretionary spending." 

Despite multimillionaires criticising the UK workforce for being obsessed with having a work-life balance last week, several companies have launched initiatives for their employees to cope with the January blues.

James Thurlow-Craig, managing director at Create Designs, has previously given his staff Blue Monday off, but this year he has planned an activity for his team instead - they're going glass blowing. 

"The team had been joking internally that as a team building activity they'd want to do a team 'school trip' somewhere for the day. They wanted something where we take the day off to do something fun but slightly educational," he said.

"On a professional level, over the last 13 years we've really seen the positive impact on the business it has when the team are motivated and generally happy, so we make sure to organise trips and activities whenever we can to recognise their hard work." 

Sophie Rhone, owner of Cupid PR, has taken it one step further, offering all her staff the day off to recuperate. 

"We're strong advocates of maintaining work-life balance, especially after my 10 years working at a global agency, where I witnessed first hand how quickly burnout can occur, particularly by the end of Q1," she said. 

"We decided to pay all of our contractors and freelancers while closing for the day as a gesture of appreciation for their hard work. This initiative is aimed at helping them recharge and avoid burnout, fostering a happier and more productive team in the long term." 

Across Leeds, London, Manchester and Edinburgh, staff at PrettyGreen will be given a £50 gift voucher to spend on "something that will give them an endorphin boost". 

CEO Jessica Hargreaves Paczek has also given her employees an early pay day and access to a "no questions asked" £1,000 interest free loan. 

"We don't know specifically how Blue Monday impacts our staff as it's against our company values to ask intrusive personal questions. But we do know that January is synonymous with feeling low," she said. 

"We regularly consult our team to understand what will add most value to them. So, our January well-being and Blue Monday initiatives are based on what the team found most effective for their well-being in previous last years." 

Staff can access mental health advice, online gym classes and nutritional advice throughout January too. 

How does Blue Monday affect people's mood and what can you do to combat it? 

New research from Mental Health First Aid England revealed that only 17% of employees feel motivated to go to work each day. 

One in 10 employees said they never feel inspired by their job, and less than a quarter felt enthusiastic daily. 

Combined with a spell of winter blues, January can prove to be a month when more people feel down, tired, irritable and stressed. 

Dr Phil Clarke, senior lecturer in psychology at the University of Derby pointed out that depression is a "much more distressing and a longer-term condition than one key day". 

"Instead of being pessimistic in January, it can be an exciting and optimistic month for people. It is an opportunity to start fresh," he said. 

Here are some of his suggestions to help you through: 

Strive to achieve your New Year's resolutions

If you are struggling to stick to your New Year's resolutions, he advised going back over them and re-evaluating where you could make small changes to help you achieve your goals. 

Get outside and exercise

Exercise helps release endorphins in the brain, which are known as "happy chemicals", he said. 

"You may feel tired and sore immediately after working out, but you will feel mentally more positive, happy and experience a mental high.

"Regular exercise helps reduce stress and feelings of anxiety, boosts your self-esteem and helps with your sleep. So, keep active."

Spend time with friends and family

"This does not cost anything financially and can instantly make you feel better by putting a big smile on your face," Clarke added. 

"Positive psychology shows that counting your blessings and be mindful of the good things in your life can lead to improvements in mood and wellbeing." 

Try a hobby or volunteer 

Dr Clarke said starting a new activity or volunteering could help.  

"As well as looking after yourself, there is nothing better than the feeling of helping others. If you have some spare time, see what volunteering opportunities are on offer in your local area and lend a hand to those who need it," he added. 

FTSE 100 takes a 'pause for breath' ahead of Trump's inauguration

The FTSE 100 is clinging on to Friday's record closing high.

The top flight index rose 1.4% on the day to hit 8,505 points at the end of last week.

Values were largely boosted by a weaker pound.

It's explained by the fact that around 80% of revenues for FTSE 100 firms come from overseas. These are worth more to a company when that money is booked back in the UK.

Analysts suggested that Monday's open, that saw the index rise by just one point, reflected a pause for breath ahead of Donald Trump's inauguration.

A flood of policy announcements could follow later in the day.

A combination of dollar strength and sterling weakness is still swirling around the UK currency.

It took a fresh hit on Friday after weak retail sales data was seen as bolstering the case for more UK interest rate cuts this year.

The pound stood at $1.22 and €1.18 in early London-based trading, with little sign of much recovery in the short term after the pounding it has received in recent weeks.

Indeed, it has been in decline against the dollar since September, when the UK currency was worth $1.34.

Another market we've been keeping a close eye on has been oil.

A barrel of Brent crude remains at $80.

Stalling upwards momentum are broad hopes around peace in the Middle East and speculation that Mr Trump could ease some Russian energy sanctions to help lubricate the path to peace with Ukraine.

Harsher US sanctions on Russian oil are currently supportive of prices.

-SKY NEWS