Financial markets have had a rough ride in December and, to an extent, it indicates the kind of difficulties they will face in 2019.

While the global economy is expected to slow down, the bigger uncertainty will be how the policy is handled, especially in the US. For instance, US president Donald Trump believes that the US Federal Reserve is responsible for the recent rout in the stock market and is reported to have explored the option of firing Jerome Powell. Trump again argued this week that the Fed is the only problem for the US economy. Clearly, the threat to Fed’s independence is affecting sentiments in financial markets. Further, the domestic policy uncertainty in the US is not helping global markets.

Aside from global issues, Indian markets will have to deal with election-related uncertainties. A lot will depend on the kind of formation that is voted to power in the summer of 2019. However, amid these uncertainties, lower crude prices and softer inflation, which could open up the possibility of lower interest rates, may provide some stability to Indian markets in the near term.