Trump losing the war at home has mega ramifications for India, global economy

Electoral dent to President Donald Trump in the mid-term elections will have multi-fold ramifications on the global economy.

Even though Trump posted a photo of red cap reading “VETO” on Truth Social, reminding the powers bestowed under Section 7, Article I of Constitution upon the U.S. Presidents to block legislations using a veto, Trump also agrees the electoral debacle was essentially caused by his administration’s Iran expedition but also termed it necessary in the same vein.

That said, the blue wave taking control of the US Senate, and Democrats crossing the majority mark in the House will potentially keep Trump’s unilateral approach to legislative businesses under tight leash. More so, the US congress will have now have power to launch investigations into the decisions by Trump administration in the last two years.

Is Donald Trump taking refuge to a poetic metaphor amid the electoral debacle. Well, his latest Truth Social post may seemingly have some hint. Trump has been in favour of ending the clock changes in favour of more evening daylight.

Talking about daylight saving time (DST) ending, the resulting early sunsets, and the Senate’s failure to pass the Sunshine Protection Act, which would have ensured DST permanent year-round, Trump said, “It’s so dark outside, so early (Sunset was 5:06 P.M., and it was dark by 5:31 P.M. — Isn’t that ridiculous?). Just a few days ago it was so nice and sunny at this same time.”

With the blue wave flipping the Senate, Trump’s sunny side is definitely down, for reasons ranging from high cost of living in the wake of an unpopular war along with corruption in high offices. Trump’s “drill baby drill” call post his thumping victory two years ago, has been retorted by “price price baby” diatribe by the electorate.

Softening crude oil prices a big relief for India.

So, what next and what especially does this mean for India. Crude oil prices have corrected sharply as market participants expect the verdict to have a major bearing on the Iran war. There are expectations that the war may end sooner than later, especially as Vice President J D Vance squarely blamed the war in the Middle East for the electoral debacle. Brent crude prices corrected to below $95 per barrel, from $117 per barrel last week.

“The reason we lost is the war. The president himself said so last night,” Vance said in the post.  

While softening of the crude oil prices is a major relief for India and will provide much needed breather on high energy import cost and inflation, experts are of the view that the FPI inflow will be back to the domestic prices as U.S. bond yields soften.

“Lower US yields and a softer greenback will spur Foreign Portfolio Investment (FPI) inflows back into high-yielding emerging markets like India. A retreating U.S. Dollar index relieves pressure on the INR, helping curb imported inflation and easing intervention requirements for the Reserve Bank of India,” said global market expert Ajay Bagga in a post on X.

“US Treasuries rallied as yields cooled. Reduced risk of ballooning budget deficits lowers borrowing expectations, providing immediate price relief across global fixed-income assets. The greenback weakened as aggressive fiscal stimulus expectations cooled off,” Bagga added.

ICICI Bank Senior Economist Anagha Deodhar said the Dollar is likely to trade softer in the near term. "Prospects of a divided government reduced fiscal stimulus, and potentially fewer rate hikes by the Fed also weighed on the DXY. The dollar index fell 0.5% to 101.45 in response to the result. We expect it to trade softer in the near term," Deodhar said.