FX.co ★ Sensex, Nifty Seen Lower As Markets Weigh Impact Of Trump Presidency

It appears that Indian stock markets may face a downturn at the opening on Thursday as investors assess the potential impact of Donald Trump's anticipated return to the U.S. presidency. Projections suggest the U.S. Republicans are poised to regain control of the Senate for the first time in four years, although the House remains undecided.

Concerns are mounting over possible adverse effects on global economic growth and inflation if Trump enforces the import tariffs he previously vowed to implement. Such inflationary pressures could lead to a surge in the U.S. dollar and bond yields, potentially affecting Foreign Institutional Investor (FII) flows into India in the near term.

On Wednesday, the benchmark indices Sensex and Nifty each gained more than 1%, with IT stocks driving the upward trend as Trump proclaimed victory in the 2024 presidential election. Meanwhile, the Indian rupee experienced its most significant decline in over four months, dropping by 17 paise to close at 84.28 against the U.S. dollar.

In Asia, stock markets were mostly down this morning, although Chinese and Hong Kong markets diverged from the regional decline, as local lawmakers convened to discuss strategies for spurring growth.

The prices of gold and copper took a sharp decline due to the U.S. dollar's rise following Trump's win. However, oil managed to maintain slight gains after a minor fall on Wednesday, amid unexpected data revealing an increase in U.S. crude oil inventories.

U.S. stock markets reached record highs overnight, with Treasury yields rising across the board as Trump resumed presidency, marking a significant event for American democracy. Analysts anticipate that the Trump administration may roll back government regulations and adopt a more favorable stance toward mergers and acquisitions. Nevertheless, policies including tax cuts and tariffs could introduce inflationary pressures.

The Dow Jones Industrial Average jumped 3.6%, the Nasdaq Composite rose by 3%, and the S&P 500 advanced by 2.5%.

In contrast, European stocks, despite initial gains, ended lower on Wednesday, driven by concerns over Trump's policies on tariffs and immigration. The pan-European STOXX 600 fell by 0.5%, Germany's DAX decreased by 1.1%, France's CAC 40 declined by 0.5%, and the U.K.'s FTSE 100 finished slightly lower.