Does The Market Care Who Becomes The President? Experts Predict A Shift From Indifference

Financial markets are currently showing indifference towards the ongoing presidential election. However, this could potentially shift in the near future.

What Happened: The financial markets are currently not reacting to the presidential election. This nonchalance could soon change, as the markets have historically been influenced by political events, according to a CNBC report. Experts suggest that this indifference might not last long, and the markets could soon start reflecting the political climate.

"As the noise picks up around the election in the U.S., we'll see people shift their focus as things gain momentum," said Joe Salmond, a portfolio manager at Thornburg Investment Management.

"There's still risk [with the Fed], but it's getting less as time goes by. Overall, things are settling down. That will lower people's attention."

One of the biggest tasks ahead for the next president is naming the new Fed chair as incumbent Jerome Powell‘s term ends in 2026.

However, Doug Roberts, founder and chief investment strategist at Channel Capital Research, feels that the elections will have little impact on the market and economy.

"It may affect individual sectors based upon the legislation that they're talking about. In essence, you're not going to see a lot happen. The market likes gridlock because then there's not going to be a major redistribution of wealth one way or the other, despite what everyone says,” he said.

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Why It Matters: The financial markets’ reaction to political events can significantly impact investors’ decisions. A sudden shift in the market’s response to the election could increase volatility, affecting investment strategies. Historical data shows that presidential election years often influence stock market trends.

Speculation about the return of Donald Trump as president has led to contemplation about the potential consequences for the stock market, significantly impacting inflation, interest rates, and the U.S. dollar. Trump has also claimed that the record-high stock market under President Joe Biden is a result of investors' confidence in his potential return to the White House.

On the other hand, there has been a shift in Biden’s approval ratings, with voters attributing inflation woes to corporations rather than his policies, which could also impact the market’s response to the election.

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Image made with Midjourney AI.