Why India and Pakistan's stock markets are rallying after the US midterms

Résumé détaillé

Stock markets in India and Pakistan have rallied following the US midterms, buoyed by hopes of easing tensions with Iran and lower oil prices. But analysts say the gains are…

Stock markets in India and Pakistan have rallied following the US midterms, buoyed by hopes of easing tensions with Iran and lower oil prices. But analysts say the gains are driven by different factors, and lasting economic relief remains uncertain.

BENGALURU/KARACHI: Investors in India and Pakistan are hoping that the outcome of the United States midterm elections held last week will ease geopolitical tensions and bring down oil prices, offering relief to two economies grappling with high energy costs.

Stock markets in both countries posted some of their biggest gains in months last week after Democrats won control of both chambers of the US Congress, raising hopes that President Donald Trump could face greater checks on his trade and foreign policies.

The rally extended into this week, with India's benchmark index Nifty 50 rising 0.84 per cent on Wednesday (Nov 11), while Pakistan's KSE-100 slipped 0.14 per cent after surging 3.13 per cent the previous day, amid easing geopolitical tensions, lower oil prices and strong remittance inflows.

For India and Pakistan, which rely heavily on imported oil, lower energy prices could help ease inflation and reduce pressure on businesses and households.

In India, stronger corporate earnings and renewed foreign investor interest have helped lift markets, while Pakistan's rally has been fuelled largely by hopes of easing US-Iran tensions.

Global oil prices fell nearly 12 per cent between the US midterm elections and Nov 10, according to Reuters price data, amid hopes that easing tensions with Iran would reduce supply disruptions.

But analysts caution that lasting economic relief will depend on whether oil prices remain low and diplomatic hopes lead to concrete progress.

For now, it remains unclear whether the stock market rallies signal a broader economic recovery or merely short-lived optimism.

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