Do elections really matter for the stock market?
- Elections historically have a mild impact on stock markets
- Equity markets in the US usually rise into elections and then move higher afterward
- Cyclical sectors perform well post-election
- Markets adjust to ‘change’ elections with a lag of around four to five months
- Emerging markets tend to fall into elections and then rise afterwards
- Mixed results for markets with elections this year
Elections have historically had a mild impact on stock markets, according to a study by strategists at Citi. In the US, equity markets tend to rise into elections and continue to move higher afterward. Cyclical sectors perform relatively well post-election. While volatility may rise into elections, it tends to fade later. The study also found that markets adjust to ‘change’ elections, where policies shift, but with a lag of around four to five months. Emerging markets, on the other hand, tend to see a fall in equities during elections, followed by a rise afterward. The markets with elections this year have mixed results, with some countries experiencing market gains six months after election day while others trade somewhat lower. Overall, the study suggests that while elections do have some impact on stock markets, it is generally mild and markets tend to adjust over time.
Public Companies: Citi (C), S&P 500 (SPX)
Private Companies:
Key People: Ron DeSantis (Republican presidential candidate), Modi (Prime Minister of India)
Factuality Level: 7
Justification: The article provides information about the impact of elections on markets based on a study conducted by Citi. It mentions that historically, elections don’t have a significant impact on equity markets, and that markets prefer continuity but can adjust to policy shifts. It also mentions that in emerging markets, equities tend to fall into elections and then rise afterwards. The article includes some specific examples of countries and their market performance around elections. Overall, the information provided seems to be based on the findings of the study and does not contain any obvious misleading or biased information.
Noise Level: 3
Justification: The article provides a brief analysis of the impact of elections on markets, citing a study by Citi. It mentions that elections don’t have a significant impact on equity markets, with a mild upward trend before and after elections. It also highlights that markets adjust to policy shifts after a lag of four to five months. The article briefly mentions the performance of emerging markets during elections and provides some examples. Overall, the article stays on topic and provides some evidence to support its claims.
Financial Relevance: Yes
Financial Markets Impacted: The article discusses the impact of elections on markets, specifically examining the stock-market impact of elections in different countries.
Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article does not mention any extreme events or their impact.
www.marketwatch.com 
