US Presidential Elections

Regardless of your own personal thoughts about those presently fighting it out to become the 45th President of the USA, there’s little question that this year’s campaign is going to be remembered as among the most unusual and unpredictable of all time. Even though this election won’t directly impact on the United Kingdom, it’s fair to state that all eyes will be on the United states until November when we discover who will succeed Barack Obama. And, naturally, any effect on United States financial markets are going to be felt throughout the world.

With all the rule books of exactly what to expect apparently tossed out of the window, the issue of exactly what impact the election as well as the potential outcome might have on markets just might be a bigger factor when compared to any prior election year. Looking back on the last 100 years of data, the Dow Jones industrial average results are about the same as a typical year, about 10.1%. That said, when an obligatory president isn’t running, the profit drops to merely 2.1%. It’s important to note, however, this is based on information from only 8 open elections, making this rate less certain.

Typically, the 1st year of any president’s four-year term produces the smallest average profit, and their last year in office is usually the second-lowest. The 2nd year is typically slightly better, and the 3rd year the best by a considerable amount. Based on this pattern, 2016/17 will probably be relatively poor, with a resurrection in growth in 2018/19.

All this appears to support the age-old concept that a particularly uncertain future is one thing the stock markets don’t like. By having a divisive person like Donald Trump getting stronger and stronger, 2016 provides possibly the murkiest idea for quite some time of exactly what the future could hold. Trump’s unforeseen remarks and insufficient public office expertise cause it to challenging to understand what his commercial and financial plans will be like if he was to succeed as president.

Hillary Clinton, is, in contrast, simpler to predict. Furthermore, polls throughout America appear to suggest Clinton will likely beat Trump. Using this prediction, much of the economic anxiety is taken away. But it is a 2 horse race and anything could happen over the next 5 months.

Ultimately, whilst it’s worthwhile considering the impact Trump vs Clinton will have, and just what the results of November’s political election may mean moving forward, it’s also reasonable to suggest that nothing should be predicted with any degree of certainty in an election year, particularly one as mad as this one has proved to be so far.