After the historic win of Donald Trump in the 2024 US Presidential election, the Asia markets have set their eyes on the Federal Reserve Bank for their interest rate policy. According to the Register-Herald, investors believe Trump’s economic policy, which includes adding a 60% tariff on Chinese goods and a stronger immigration policy, might facilitate economic growth. However, investors also expect that these policies might put more upward pressure on prices.
Further, much of Wall Street’s record-breaking performance this year has largely been driven by the anticipation of the Federal Reserve reducing interest rates, as inflation has decreased towards the 2% target. While lower interest rates can stimulate economic growth, they also have the potential to reignite inflation. Also, according to data from CME Group, it is assumed that the Fed is more likely to cut down its interest rates.
The Fed’s decision on the interest rate, which will be declared on Thursday, has yet to be seen.
Impact On Global Markets
Asian markets retreated after yesterday’s presidential election results.
Japan’s Nikkei 225 lost its early gains, slipping 0.6% to 39,246.86, while Seoul’s Kospi declined by 0.4% to 2,554.57.
Australia’s S&P/ASX 200 inched down 0.1% to 8,191.00.
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Chinese markets also saw declines. Hong Kong’s Hang Seng fell 0.7% to 20,386.36, and the Shanghai Composite index dropped 0.7% to 3,359.99.
However, the US market reacted differently from the Asian market. The S&P 500 soared 2.5%, marking its best day in almost two years. The Dow Jones Industrial Average climbed 3.6% to 43,729.93, and the Nasdaq composite rose 3% to 18,983.47.
