Weekly Insights: How Trump's Victory Could Shake Up Global Markets and Key Sectors in India

BANGALORE, India - Nov. 11, 2024 - PRLog -- As the U.S. presidential election results are out, Trump's win is set to send ripples through global markets, commodities, and trade flows. Let's dive into the anticipated trends across rates, FX, and equities, and examine how India's economy and key sectors might fare in a transformed landscape.

1. Rates Market: The Upward Drift of U.S. Bond Yields

• Climbing Bond Yields: As Trump returns to the Oval Office, U.S. bond yields—especially those on the longer end—could rise steadily. With expansionary fiscal policy on the table, inflation expectations could heat up, infusing yields with a sustained upside bias.
• What's Driving This? A wave of government spending would likely stoke growth expectations while increasing debt-to-GDP levels might pump inflationary pressures, anchoring yields on an upward path.

2. FX Markets: The Dollar's Rally Amid Global Uncertainty

• US Dollar's Edge: A Trump victory could be the spark for a dollar rally, with fiscal expansion boosting U.S. growth prospects while economic weakness looms in the Eurozone and China. Consensus expects the DXY index to settle in a bullish range of 104-106 in the near term.
• USD/INR Outlook: Rising U.S. yields could pull the USD/INR pair higher. Although RBI interventions may temper sharp depreciation, the pair could gravitate between 84.00 and 86.00 in the coming months.

3. Equities: Corporate Tax Cuts and a Broadened Rally for U.S. Stocks

• Tax Cuts to Boost Equities: Proposed corporate tax cuts (from 21% to 15% for domestic manufacturers) could infuse energy into the U.S. stock market, expanding gains beyond Big Tech. This scenario may spark a new wave of stock buybacks, driving share prices higher.
• Capital Inflows: As profitability soars with these tax incentives, U.S. equities could see a surge in capital inflows, bolstering market performance as investors flock to promising returns.
  
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