Trump’s win in the US elections has “amplified” the reflationary theme that has shaped global markets in recent months, according to Blackrock’s global chief investment strategist, Richard Turnill.

“Central banks signalling a greater toleration to let inflation run hotter and policy emphasis shifting to fiscal stimulus,” Turnill said.

If inflation raises, Jan Dehn, head of research at Ashmore, anticipates that Trump may be forced to give the long end of the US yield curve “special attention” to previous serious bear steepening, “which could blow up everything from the stock market through to housing.”

Following the election, the US dollar index climbed to a two-week high after touching a one-month low, Blackrock reports. Turnill expects the dollar to continue to strengthen.

The strengthening of the dollar would have a negative impact on Asian stocks, according to Mihir Kapadia, CEO and founder of Sun Global Investment.

“Considering the dollar basket is holding at a near 14-year high and investors in the US expect a rise in inflation, the Asian market currencies are experiencing tremendous stress especially as they previously benefit from international capital inflows – which is currently under threat perhaps in anticipation of the protectionist fiscal policies of Donald Trump.”

Gene Frieda, global strategist at PIMCO, agreed that the result of the US elections have created a more challenging landscape for emerging markets, “with the potential for fiscal stimulus in the US, a more hawkish Federal Reserve and protectionist trade policies.”

If this result were to occur, it would mean a “mixed bag” for EM: on the plus, the US demand for imports would rise, but this must be weighed up against the negative implications of rising US rates, which would likely strengthen the US dollar and complicate the picture for EM assets.

“Not only have most emerging markets been weak against the dollar since the Trump election, but the Rupee has also been hit by the fallout from Prime Minister Modi’s ban on high denomination notes,” added Kapadia.

Kapadia stressed that one of the key factors behind the pressure on emerging markets is “the fear of protagonist trade policies from the President-elect Trump.”

The worst-case scenario for EM would be for trade protectionism to intersect with loose US fiscal policy, according to Frieda, which would prompt the Fed into a more aggressive response to counter the higher aggregate demand and negative shock.

However, Dehn views the material movement in asset prices and currencies in emerging markets as the result of “the market overreacting.”

Kapadia agreed that, on the positive, EM assets faced these complicated scenarios from a relatively attractive starting point. “While investment flows have returned to EM and increased since February, the inflow has been modest compared to past cycles,” he said.

Consequentially, the traditional threat to EM, which is a “sudden stop in capital flows born of a more hawkish Fed,” appears “reasonably constrained.”