Investment Manager’s Guide: US Presidential Elections Impact on Key Markets
Love it or hate it, the 2024 US Presidential Election will only continue to get more media coverage from here. In an effort to head off the inevitable efforts to tie election results to market performance, we’ve analyzed the last 10 US Presidential elections, 40 years’ worth of data, and the price action of five key markets: EUR/USD, GBP/USD, USD/JPY, Gold, and S&P 500.
Every election brings its own unique circumstances and stakes, so the data and figures in this guide should not be taken as gospel for what will happen in the 2024 election. As you may have heard before, past market performance is not necessarily indicative of future outcomes.
Your approach to trading around elections may be different than another trader who reads this article. Regardless of your preferred approach, a thorough, historically informed perspective of the potential impact of US elections on markets will help you better prepare for and plan around situations when the political stakes are high.
1. How Could the Election Outcome Impact EUR/USD?
The EUR/USD has not shown a consistent trend of strengthening or weakening in relation to US Presidential Elections. The greenback has shown some strength in the run-up to the election against the euro in recent elections, but the trend has been more neutral in recent decades.
2. GBP/USD’s Reaction
GBP/USD showed a similar trend of US dollar strength in the quarter after an election in the 1980s and ‘90s, but that trend has normalized since 2000.
3. USD/JPY: Mixed Reaction Remains in the Offing
USD/JPY has shown persistent strength in the quarter after US Presidential elections, but it’s difficult to determine if these moves are related to the election or broader macroeconomic trends.
4. Gold Analysis: How Have US Presidential Elections Impacted the Gold Market?
Gold has generally weakened both before and after US Presidential elections, except for a few exceptions. Gold has fallen in the 3 months after a US Presidential Election eight out of nine times.
5. S&P 500 Analysis: How Have US Presidential Elections Impacted the US Stock Market?
The S&P 500 has generally fallen in the month leading up to the election but has gained ground in the quarter following an election in the last ten times.
Ultimately, the politicians and parties occupying the White House and Congress are just one of the many variables that drive the stock market, the US dollar, and gold. The direct impact of elections on markets is often exaggerated. The most important takeaway is to focus on developing a sustainable trading strategy that works regardless of which way the political winds are blowing at the moment. Title: Expert Investment Manager Reveals Top Tips for Financial Success in Today’s Market
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Analysis:
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