2 days ago
The US economy and US President Donald Trump’s “America First” trade policies will be the two biggest drivers for markets going forward, according to Robert Subbaraman, Head of Global Macro Research at Nomura.
He believes Trump’s focus has shifted from Wall Street to Main Street, meaning his policies may not be as concerned with stock market performance as they were in his first term.
“We’re not so convinced that he’s focusing so much on Wall Street,” Subbaraman said. “I think a lot in Wall Street are hoping for a so-called ‘Trump put,’ and if the equity market corrects to a certain extent, he will call it all off, and he will focus on supporting the US economy. We’re not so sure about that. In fact, we just did some research looking at Trump’s first term. And contrary to what many people think, if you look at when Trump accelerated tariffs in his first term, the equity market was actually coming down, he continued to increase tariffs on China.”
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He noted that tariffs under Trump have already increased significantly—“If you looked at the effective US tariff rate, as you said, it was 2.4% before Trump came into power, it’s now, right now at around 10%. It’s gone up a lot already.” While Nomura does not expect a US recession, it does forecast a moderate slowdown.
On India, Subbaraman sees relative insulation from global risks. He expects India’s GDP growth to be around 6.2% in 2024-25 (FY25) and 2025-26 (6%) in FY26, highlighting that while this may seem low for India, it remains significantly higher than China’s expected 5%.
“China just announced that their growth target for this year is around 5%, and analysts are saying, you know, if they get to 5%, that would be really, really good for China. Many of us think it’s going to be lower than that. For India, 6% is seen as low. That’s the floor kind of level. So India’s growth potential is looking very good to me.”
Nomura believes lower inflation and potential RBI rate cuts of up to 75 basis points this year will further support India’s economy by boosting investment and growth.
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Subbaraman pointed out that India is less exposed to global trade disruptions because it is not deeply embedded in global industrial supply chains and has a large domestic market.
From a geopolitical standpoint, India could also benefit from US-China tensions, as the US looks for strong regional allies.
If global uncertainty leads to a correction in US equity markets, Subbaraman expects some capital to flow into India.
“If Trump focuses more on Main Street rather than Wall Street, if there is a bigger equity market correction in the US—I’m not saying it’s going to happen, but it’s certainly a risk—there’s a lot of uncertainties. I think we will see a significant amount of that money, it’s going to flow out of the US somewhere. I think India is an interesting potential spot.”
