Trump victory upsets global markets

Yesterday, the market saw only a small glimpse of the changes that Donald Trump’s victory could bring. The US stock market surged, the dollar strengthened, and bond prices fell. Investment gains in bonds increased, while gold prices dropped sharply. Industrial metals also fell, but cryptocurrencies soared.

Global markets

For now, the US market is showing strong growth. However, the boom might eventually turn into a slump. Trump’s proposed tariffs are likely to increase prices in the US, leading to higher interest rates. The suggested tax cuts will add to the deficit and, in turn, the interest burden. These factors may slow down growth.

US stocks had a fantastic rally on Wednesday, with all major indices hitting record highs. The Dow Jones soared by 1,508.05 points (3.57%) to close at 43,729.93. The S&P 500 gained 146.28 points (2.53%) to finish at 5,929.04, and the Nasdaq rose by 544.29 points (2.95%) to close at 18,983.47.

Shares in companies like Tesla Inc. (up 15%) also jumped, reflecting investor optimism. There's also speculation that Elon Musk, who has supported Trump, might join his administration.

Trump’s plans to relax regulations for banks have benefitted major financial institutions. Shares in JPMorgan Chase and Wells Fargo rose over 10%, and the Russell 2000 index (focused on smaller companies) jumped 6%, fueled by hopes that tariffs will help smaller businesses.

Trump’s victory and the dollar’s rise have affected gold prices, which dropped sharply by $84.50 (3.08%) to $2,660 per ounce on Wednesday. This marks a significant fall of more than 3% and the largest drop in five months. Gold is no longer seen as a safe-haven investment as traders turn to the stronger dollar. The rise in the dollar is likely to continue as Trump announces his policies, which could make gold less appealing in the short term.

Silver prices also fell, losing 4.5% to $31.14 per ounce.

Meanwhile, oil prices saw a slight drop but have since rebounded. Brent crude ended at $75.14 per barrel, down from $75.46, while WTI crude stood at $71.96.

The dollar index jumped by 1.3% to 105.44 on Wednesday, a rise that is expected to continue as Trump’s policies unfold. This has put pressure on the rupee, which weakened against the dollar, closing at ₹84.28. The rupee may fall further today.

European markets, initially higher, later saw declines as concerns about trade wars and other issues related to Trump’s policies emerged. In Asia, the markets were also down, with Japan's Nikkei index, which rose 2.5% on Wednesday, falling 0.85% this morning.

Indian market

The Indian market, however, was upbeat on Wednesday, largely due to the belief that Trump’s policies could benefit India, particularly in terms of trade relations and his opposition to China. TCS and Infosys stocks saw strong gains (up 4% each).

The Nifty ended up 270.75 points (1.12%) at 24,484.05, while the Sensex gained 901.50 points (1.13%) to close at 80,378.13. Smaller stocks, including the Mid Cap and Small Cap indices, also performed well. However, foreign investors sold off shares to the tune of ₹4,445.59 crore.

The market remains uncertain. The Nifty may continue to rise if it crosses the 24,500 mark strongly, with the next targets around 24,800 and 25,000. However, if it fails to hold above 24,400, a decline towards 23,200 could be on the cards. Support levels for the Nifty today are at 24,280 and 24,200, while resistance is at 24,540 and 24,615.

There is growing optimism in India, especially regarding potential positive trade relations with the US. However, concerns remain about issues like H1B visas, import duties, and cooperation on nuclear technology. The Indian market’s future will depend on how these issues are resolved and how foreign investment behaves in the coming days.

Gold update

The drop in gold prices is significant. In Kerala, gold prices increased by ₹80 to ₹58,920 per 8 grams on Wednesday, but a further fall in global prices is expected today.

Bitcoin soared 10%, hitting a record high of $76,493.86 following Trump’s win. Other cryptocurrencies like Ether also saw strong gains, as it is believed that Trump’s policies might help cryptocurrencies gain more recognition.

Industrial metals such as copper, aluminium, and nickel fell in value as the dollar strengthened. Copper, for instance, dropped 3.62% to $9,250.40 per tonne.

Market indicators (7th November)

Sensex: 80,378.13 (+1.13%)
Nifty50: 24,484.05 (+1.12%)
Bank Nifty: 52,317.40 (+0.21%)
Dow Jones: 43,729.93 (+3.57%)
S&P: 5,929.04 (+2.53%)
Nasdaq: 18,983.47 (+2.95%)
Dollar (INR): ₹84.28 (+₹0.17)
Gold (oz): $2,660.00 (-$84.50)
Crude (Brent): $75.14 (-$0.32)