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Donald Trump is the 45th President of the United States of America; the most powerful man on the planet. But his presidency has left economists across the globe uneasy. There is an air of uncertainty and fear on how things will pan out under his administration. In fact, there are a few stock market indicators that we have to watch out for under Trump’s foreign policy.
In his inaugural speech, the President has claimed to create 25 million jobs and to raise the GDP to 4% which many analysts feel is too good to be true. The present growth rate is stuck between 1.5% to 2.5%. There are several challenges to achieving this goal, and only time will tell if America will rise out of the slump that it has fallen into.
In this segment, we will discuss if Trump’s foreign policy will affect the markets and if so which are the market indicators that we should pay heed to.
The OMX Baltic Benchmark index
The role of Russia didn’t end with the elections, wherein the topmost intelligence agencies tried to find if any link existed between Trump and Russia. The truth is yet to be discovered. In the economic front too Russia has a crucial role to play during the Trump administration.
There is an unvoiced fear that the North Atlantic Treaty Organization might be forsaken by the US in accordance with Putin’s demands. If this happens, then the Baltic nations of Estonia, Latvia and Lithuania will suffer. These countries have a sound economy which will react to the relation between US and Russia. Therefore the OMX Baltic indicator is one that the world should pay attention to.
Taiwan Stock Exchange Weighted Index
Another country that was on tenterhooks with the US election was China. US policy on China will be reflected by the Taiwan Stock Exchange. If things do not work out with China, then this index will be a clear indication of the state of affairs. Of course, the US policy is not the only defining factor on the Taiwan Stock Exchange but it most certainly is a game changer.
Donald Trump has promised to rebuild America; his motto is, “buy American and Hire American.” He has promised to make America strong wealthy and proud again. His proposed tax cuts and improved infrastructure has seen the resurgence of the US dollar.
As always the dollar still seems to be a safe bet when compared with the turbulent eurozone currencies and Brexit. The US dollar remains a global economy indicator even today.
A too strong US Dollar is not good news because the dollar has to remain more liquid to prevent severe economic volatility in the market. The debt burden on several developing economies will increase if the dollar becomes strong. This is not good for the global economy.
Trumps’ economic policies are been debated even today. How will they affect the global economy and the local American is to be seen. As of now, the President has predicted a rosy future to the American people but will it become a reality only time will tell. For now, the world is watching with bated breath as Trump takes the seat in Oval Office and gets ready to take decisions that will affect the entire global community.
The full history (1959-present) of the three composite indexes and their corresponding 6-month diffusion indexes are available in two forms:
- hindex.htm – view with browser
- hindex.wk1 – download spreadsheet version