Decoding stock market reactions of BRICS to U.S. policy shifts in 2025

Abstract On January 20, 2025, President Trump’s seismic cautions ended birth right citizenship and slapped 100% tariffs on BRICS nations engaging in non-dollar transactions sent shockwaves through global markets. This study analyses immediate financial turmoil and dissecting stock indices across the BRICS economies. Event study is used to analyze the impact of Trump's January 20, 2025, cautions on the BRICS stock markets. Daily data from May 2024 to February 2025 were analyzed through a 10-day event window and a 160-day estimation window, revealing a heightened reaction across BRICS markets, with sector-specific disparities. Brazil and South Africa exhibited immediate sensitivity, India and China remained relatively stable, suggesting stronger shock absorption whereas Russia showed a delayed yet persistent reaction. The short-term stock market responses suggest the initial economic stress due to geopolitical shocks and underscore the risks of all emerging economies to remain sustainable over the long run. The findings underscore asymmetric vulnerabilities within emerging economies, shaped by policy exposure, investor sentiment, and sectoral dependencies, which underscores urgent need for BRICS nations to build sector-specific shock absorbers against disruptions.