Trump 2.0: Report Predicts Positive Impact on Equities and US Dollar

The second term of US President Donald Trump, referred to as “Trump 2.0,” will likely have varied effects on different markets. According to a report by Union Bank of India, the equity market and the US Dollar will benefit, while bonds will face challenges.

Equity Markets and US Dollar to Benefit

The report compares two key periods: before Trump’s re-election and after the election, from January 2 to November 4, and then from November 4 to December 31. It indicates that the second period, post-election, reflects market changes under Trump 2.0. The findings suggest that Trump’s second term will be positive for equities and the US Dollar but negative for the bond markets. The report states, “Trump 2.0: Positive for Equity, Dollar, Negative for Bonds.” Additionally, it highlights that “US exceptionalism” will continue to drive macroeconomic trends in 2025. The report also warns of continued volatility in forex markets as Trump’s second term progresses, with the inauguration date on January 20, 2025, being a key event.

Commodities Show Mixed Trends

In commodities, gold showed gains initially but corrected slightly after the elections. Oil and copper had modest increases early in the year, followed by a surge after November 4. Aluminium performed well at first but also corrected post-election. Cotton, on the other hand, showed a consistent negative trend throughout the year.

Global Equity Markets: Diverse Trends

Global equity markets experienced diverse trends. The US Dow, Germany’s DAX, and the UK’s FTSE saw strong gains and surged further after the election. Japan’s Nikkei also bounced back after earlier losses. Meanwhile, India’s Sensex had gains before the US election but corrected after Trump’s re-election.

Bond Markets Face Pressure

In the bond market, US 10-year yields showed slight changes. German 10-year bonds declined after the election, while UK 10-year bonds saw marginal gains. Japan’s 10-year bonds showed an uptick, but India’s 10-year bonds declined throughout the year.

US Dollar Strengthens After Election

The US Dollar Index (DXY) saw a significant increase after November 4, reflecting a shift in sentiment. Both the euro and pound weakened post-election. The Japanese yen also depreciated after November 4, while the Indian rupee showed limited negative fluctuations.

Conclusion: Market Shifts Post-Election

The US election results have triggered significant market changes, especially in commodities, equities, and currencies. Trump’s second term is likely to continue driving market volatility, with equities and the US Dollar seeing gains, while bonds face challenges.