Traders Cautious Ahead of Trump's Inauguration

• Will Trump send markets into a frenzy?

• Sterling slides as retail sales figures disappoint in December.

The day of Donald Trump’s inauguration has arrived and financial markets are displaying exactly the kind of caution you would expect given his incredible ability to send investors into a frenzy.

Throughout his campaign and since winning the presidency back in November, we’ve repeatedly seen two sides to Trump; the market friendly pro-growth, low regulation side and the protectionist, combative side that makes investors extremely uneasy. With it being unclear which side he’ll lean more towards today, traders are currently opting to sit on the fence but I imagine this will change dramatically later one once the ceremony gets underway.

We may not get many of the details we’re looking for today, for example on the fiscal stimulus package that has been promised, but we should get a sense of Trump’s priorities in his first few months as president which could set the tone for the markets. Investors have very much bought into Trump’s victory so far which has left plenty of scope for disappointment and a market correction, particularly with the Dow having failed repeatedly to break above the psychologically significant 20,000 level.

The pound is one of the worst performers so far today after retail sales data for December fell well short of expectations. It seems trading volumes in December could not live up to the levels around Black Friday in November, which was expected, but it was surprise just how big a drop we’ve seen. While sales were still massively up on last year, it will be interesting to see whether higher prices lead to a more sustained decline in consumer appetite or whether the impressive earnings growth we’ve seen ensures a swift rebound in the coming months.