The recent US Presidential elections have presented a clear picture so far – Donald Trump, former US President, will now be making an unprecedented comeback to the White House. This development, will have far-reaching consequences, and so far, markets worldwide are responding sharply, especially within the stock and cryptocurrency sectors. A new President (even if it’s a former President making a comeback) will significantly shift US fiscal and trade policies, and the consequences of the same are likely to spill over into emerging markets, especially India.
First, we come to how the election results can impact the stock markets. Trump has secured 292 votes so far and has pledged to usher in a “golden age” for the US. The elections revealed that Republicans have reclaimed control of the Senate, and secured key wins in West Virginia and Ohio. Prior to Trump’s victory, markets in the US began to rally in anticipation of policies that will lead to a rise in government expenditure, boost in infrastructure, and even potentially lead to corporate tax cuts. These measures are predicted to support growth in sectors such as energy, finance, and defense.
In fact, the Dow Futures saw a surge of 850 points, while Wall Street strategists have projected a year-end rally to add to the 21% gain seen in the S&P 500 Index this year. This is hardly unsurprising, given that Trump’s policies have historically been viewed as favorable to big corporations. There is a catch, though, and Trump’s return could also lead to stricter trade measures and headwinds for multinational firms that rely heavily on imports or have substantial offshore manufacturing.
India is a key market for US-headquartered firms, and a change in the regime will have an impact on India’s markets as well. So far, the initial market response to Trump’s victory has been cautiously optimistic, with the BSE Sensex rising by 682 points to close at 80,159. According to Anitha Rangan, an economist at Equirus, Trump’s protectionist stance could pose challenges while reducing recent volatility in the market. Shares of TCS rose by 4% after the election results were out. “More than who wins, a clear result will be more of a relief to the markets, which have been in a volatile mood predicting the outcome. This could translate positively for India as the country’s trade relations with the US remain robust,” Rangan noted.
Cryptocurrencies have been another major area that has received a positive response from Trump’s victory in the elections. Bitcoin, the world’s largest cryptocurrency, has surged by over 10% and reached an all-time high of $75,000, while its market cap rose to $1.445 trillion. Part of this rise can be attributed to Trump’s support – the 47th president US President has signaled his support for cryptocurrencies and pledged to make the US “the crypto capital of the planet” and create a “strategic reserve” of bitcoin. This is a shift from Trump’s previous stance on cryptos – he had earlier been a crypto sceptic, but his current campaign accepted donations in cryptocurrency.
“Tonight the crypto voter has spoken decisively — across party lines and in key races across the country,” Brian Armstrong, CEO of Coinbase, commented on the matter. Bitcoin is currently priced at $74,566.32.
