Trump’s victory ignited a market rally, but will the party last?
Subscribe to enjoy similar stories. Donald Trump is set to get elected as 47th President of the US. Equity markets globally seem to be celebrating his return to the White House.
The Dow Jones Index futures have surged close to 1,000 points at the time of writing this article. Indian markets are following suit with a strong recovery on Wednesday. Meanwhile, Trump's victory has unnerved the Chinese equity markets.
The Hang Seng Index is one of the major equity markets that have slipped sharply and ended on a negative note today. The levy of high tariffs to curtail imports from China has been one of the key policy planks for Trump along with the focus on revamping of the immigration policy. The negative news for China is also good news for Indian equity markets.
Lately, domestic markets have suffered from the shift of foreign flows from India to China as part of the tactical trade, post the huge stimulus announced by the Chinese government to support their economy. The pro-business approach of President Trump along with the imposition of tariffs to safeguard interest of local businesses and jobs could be positive for the equity markets in the US. But the celebrations might not last long.
First, historical data shows that the US markets do not tend to do well for the first 90 days post the presidential elections. Second, Trump's policies could be inflationary in nature. It could result in the hardening of bond yields (which already crossed the 4.4% mark today) and might strengthen the US dollar (the doller index has surged past the 105 mark).
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