A look at the day ahead in U.S. and global markets from Mike Dolan

Likely a taste of things to come, stock and currency markets were knocked back and forth on the first day of Donald Trump's new presidency as they second guessed his trade tariff plans and remained largely in the dark on the issue as U.S. markets return from Monday's holiday.

Trump's inauguration was accompanied by dozens of executive orders and directives - ranging from emergency immigration curbs on the Mexican border to more oil drilling, a demand that government agencies control inflation, U.S. withdrawal from climate accords and pardons for 2021's Capitol Hill rioters.

But there were no specific Day One measures on long-promised trade tariffs - something flagged early on Monday by a Wall Street Journal report that weakened the U.S. dollar sharply and lifted overseas stock markets seen to be in the firing line.

Just as that relief set in through the day, however, prompting one of the biggest drops in the dollar index of the year and rallies in European and Chinese stocks, Trump later responded to questions by saying he was thinking of 25% tariffs on Mexico and Canada from Feb. 1, blaming a lack of action by both countries on flows of illegal migrants and fentanyl.

However, he also suggested his plans for a universal tariff on all U.S. goods imports were not yet in the works. "We may. But we're not ready for that yet," Trump said.

The upshot was that Monday's rallies in Mexico's peso and the Canadian dollar were almost entirely reversed and half of the euro's jump was wiped. China's offshore yuan, which had staged its biggest one-day rise since August on Monday, gave back almost half of that move too.

European stocks, which had advanced on Monday, were flat earlier today and mainland Chinese stocks also stalled after giving up early gains of almost 1%. Hong Kong's Hang Seng, however, closed 0.9% up on the day.

In a presidential memo, Trump directed Commerce and Treasury departments and the U.S. Trade Representative to probe the economic and national security risks of large trade deficits and "recommend appropriate measures, such as a global supplemental tariff, or other policies, to remedy such deficits".

The memo called for the USTR to assess China's performance under the "Phase 1" trade deal he signed with Beijing in 2020 to end a nearly two-year tariff war.

For Wall Street stocks returning after the Martin Luther King holiday on Monday and in the thick of the fourth-quarter earnings season too, the overall picture appears to remain positive and index futures were up to 0.5% up before Tuesday's bell. Netflix ( NFLX ) tops the corporate diary later.

Encouraged by the equivocation on tariffs and the rather vague prioritisation of anti-inflation measures, 10-year U.S. Treasury yields extended last week's retreat to hit their lowest since Jan. 2. But with 2-year yields backing up a touch to 4.25%, the 2-to-10-year yield curve gap narrowed to its flattest for the year.

Dampened by Trump's repeated push on more oil drilling and U.S. self-sufficiency in oil and gas, the retreat of U.S. crude oil prices to their lowest in 10 days helped improve the mood in bonds too - reinforcing the more benign view of underlying inflation that saw Treasuries bounce last week.

However, not much in Trump's first day seemed to alter market thinking on the Federal Reserve. Another quarter-point cut remains priced by midyear and futures see a 60% chance of a second move of that magnitude later in the year.

In specific sectors, the new President's withdrawal from climate talks and his planned rollback of numerous alternative energy initiatives from the previous administration saw global green stocks take a hit.

Wind power stocks in Europe, including Vestas Wind Systems ( VWSYF ) and Nordex SE fell 4.7% and 3.6%, respectively, as Trump suspended new federal offshore wind leasing pending an environmental and economic review.

Orsted also tumbled 15.3% on the news as the offshore wind developer posted an impairment charge of $1.69 billion related to its U.S. offshore portfolio.

And for previously ebullient crypto markets, the absence of any specific reference to the digital token industry on the inauguration day was seen as a disappointment.

Bitcoin and other crypto tokens, and even the newly minted token bearing Trump's name, recoiled on Tuesday from new records set earlier in the week.

Elsewhere, the British employment report held something of a mixed picture for the pound and UK markets.

UK pay growth stayed stubbornly strong in the three months to November but there were more signs of a softening jobs market.

Growth in private-sector pay excluding bonuses - a measure watched closely by the Bank of England as a gauge of domestic inflation pressure - rose to 6.0% in the three months to November from 5.5% in the three months to October.

But the number of employees registered by businesses fell 47,000 in November - the biggest monthly drop in four years.

Key developments that should provide more direction to U.S. markets later on Tuesday:

* Canada December consumer price inflation

* US corporate earnings: Netflix ( NFLX ), Capital One, Seagate Technology, United Airlines, 3M, DR Horton ( DHI ), KeyCorp ( KEY ), Charles Schwab ( SCHW ), Fifth Third, Prologis ( PLD )

* World Economic Forum in Davos, including German Chancellor Olaf Scholz, South Africa's President Cyril Ramaphosa, Argentina's President Javier Milei etc

* ECOFIN meeting of European Union finance ministers in Brussels, with European Central Bank Vice President Luis de Guindos in attendance

(By Mike Dolan, editing by Ed Osmond; [email protected])