The US stock market had a wild ride on Monday, dipping 2,300 points but quickly recovering, closing at -350 points. The Dow Jones Industrial Average crashed nearly 10% in the last five trading sessions as Trump’s tariffs went live. However, the Asian markets rebounded on Tuesday, as India’s Sensex surged close to 1,000 points while Japan’s Nikkei climbed 1,650 points.
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The markets are sending mixed reactions as investors are divided on the tariffs debate. Businesses now need to shell out more for goods to reach the US and vice versa affecting the imports and exports sector. On the heels of the tariffs, S Naren, Chief Investment Officer (CIO) at ICICI Prudential Mutual Fund predicts when the US stock market will rebound.
Here’s When the US Stock Market Will Rebound: Financial Analyst
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Naren explained that the US stock market crash was triggered by government policy. The correction is policy-driven, and governmental policies can always be withdrawn or rewritten when things go out of control. He stressed that the 2020 crash due to COVID-19 was real, as the timeline was uncertain. In this scenario, the US stock market could rebound after policies are rolled back, leading to financial stability.
“The current correction has been triggered by a government policy. When corrections are policy-driven, reversals are easier because policies can be rolled back. In contrast, events like Covid-19 are structural shocks with uncertain timelines. As a framework, when any asset class becomes overvalued — as seen with the ‘Magnificent Seven in the US — it becomes vulnerable to corrections triggered by external events,” he said to Business Standard.
In conclusion, the US stock market could get back on track when Trump’s tariffs are rolled back. Until then, investors need to brace for volatility as the global roller-coaster ride of the financial markets has just begun.
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