Markets have been jittery in the lead up to the US Presidential election next Tuesday 8 November, which is coming off the back of a poor October where our ASX 200 fell 2.2%.
Overall the US election process is drawn out over more than a year and becomes quite a circus. This time around it has been exacerbated by the fact that Trump is an unknown quantity and unpredictable, so it’s not surprising markets have fallen given the uncertainty. The fallout from Brexit is still front of mind and there has been some positioning for another shock, such as President Trump. The sell off has gathered momentum following more bad press associated with the FBI investigation into Clinton and a narrowing of the polls pointing to a close contest.
Whether its Trump or Clinton, markets will move on to the next news headline or worry, which will probably be a US rate hike in December (also being priced in). The initial shock from a Trump win would reverberate around global financial markets, but over the medium term it could be a catalyst for a stronger US market due to his pro-business and protectionist stance that would benefit a lot of US companies. A Clinton win would be more “business as usual” which would translate into swift bounce in financial markets from the current levels of pessimism.
At the end of the day, no one really knows what is going to happen with the election or financial markets. Though when the news headlines are pessimistic, if you can block out the noise and take a longer-term view, that is normally a good time to invest.
Rob Gilmour is the Managing Principal of Wealth Simplicity. The information provided should not be considered personal financial advice as it is intended to provide general advice only. The content has been prepared without taking into account your personal objectives, financial situations or needs. You should seek personal financial advice before making any financial or investment decisions.