First 100 DAYS with Donald Trump for global financial markets

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First 100 DAYS with Donald Trump for global financial markets

 

Donald Trump fought quite a bitter political war to be elected as the 45th president of the world’s oldest democracy.

As we know, politics have always had an impact on the relationships that nations hold among them, and India, has always sought a Republican president for US since it has always been better for us this way. However, now that we have Mr. Trump on the seat, there’s a lot to predict and say.

US being the most powerful nation of the world brings a huge impact on what nations do and how do see things going for themselves. The same is the case this time too. As expected, this progress in politics is also going to affect the global financial markets.  Though a lot of predictions have been made in this regard, analysts say that there is still a lot to be witnessed.

though Trump’s victory has been pretty much welcomed in America, the world has its own doubts about it.

  • Looking at the US perspective, the stock markets for America are sure to surge, more than the 2.2 average annual rate during Barack Obama’s tenure. This is majorly due to the risk aversion and public spending debt that happens only when a Republican leads the White House. Trump, on the other hand, is expected to implement the Keynesian public stimulus, which is expected to rocket the stock markets like anything.
  • However, looking at the stock markets in general, the news is not so good! The Dow Jones Index fell by almost 800 points only after a few hours Trump was elected. This was nothing but the first signal of scepticism and uncertainty that global investors had in mind.
  • On the other hand, if we look at the S&P 500 index, it has risen by 6% now since the election day. And Wall Street has not witnessed such a strong run since long.
  • Looking at the scenario, we see that though Trump’s victory has been pretty much welcomed in America, the world has its own doubts about it. There are even questions raised about the expectations on rising tariffs which can even lead to a trade war of US with other nations.
  • Looking at India particularly, we are as scared as ever! Though there are certain positives in the situation, we are scared of the plans as put forward by the new president. For instance, if Trump lowers the corporate taxes substantially, many big corporate such as Ford, Microsoft etc. might go back to America. This again would have a reciprocal impact with rising inflation and plunging stock markets.
  • A very important fact to be noted here is that India heavily depends on the US, in 2005, the country’s software services accounted for $82 billion and 60% of that was exported to North America.
  • Currently, even the biggest of the financial predictors are unaware of what’s going to happen next. Everyone is just betting on the situation. However, many analysts say that how the markets reacted to the election on the very first day is always a good indicator of the future. If this pattern persists, the markets are expected to react with a plunge in the stock prices but then recover soon.
  • However, another point to note here is that markets generally don’t alter themselves much in the beginning, the effects are only felt in the second year of the presidential term. So some analysts say that what is happening right now is not of much concern, the actual is yet to happen.

So, lets see how things evolve. But for sure, these are tumultuous times with Trump in America on one hand, and elections in France (and then in Germany later in 2017) on the other hand. For now, Asian markets seem to be better in shape than US and EU markets.

 

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