Dubai, United Arab Emirates-Sunday 30 August 2020 [ AETOS Wire ]
Financial
markets are volatile ahead of the biggest political event of the year,
the US presidential election on November 3, which are held every four
years and always on the first Tuesday in November.
The stock
markets usually widely fluctuate as soon as the election results are
published. The main question here in case Democrat leader Joe Biden
elected is how the financial markets will react. The market participants
believe that it will be negative for the stock market mainly because
Biden has said he will roll back Trump’s corporate tax cuts, which would
hit corporate profit margins. The Dow Jones Industrial Average has
generated 83% average return during Democratic administrations compared
with 45% for the Republicans.
The
S&P500 index recovered from 2020 March low, surged more than 40%
after the Federal Reserve pumped liquidity into the market. According to
a 2019-Dimensional Funds report, the market has been positive in 19 of
the last 23 election years spanning 1928-2016. The S&P has traded
positive in each six-month period before a presidential election except
2008. Since 1929, the total return of the S&P500 has averaged 57.4%
under Democratic presidential administrations, versus just 16.6% under
Republicans.
On starting
of this month, the gold price hit an all-time high of $2075. The
safe-haven metal surged more than 35% this year. The Investors have been
buying up gold this whole year as first rising coronavirus cases,
escalating tensions between the US and China and then lower interest
rates, and now the US election have heightened uncertainty among
investors.
If you look
at the technical chart, the last election period shows that the trends
of gold prices soaring in the months of July to October before the
election and then they witnessed significant drop after the event. On
average, gold prices continue to decrease until January of the following
year.
As the 2020
election comes close, GulfBrokers expects the coming weeks in the US
presidential election will be volatile for the financial markets due to
high levels of uncertainty. The single best way of protecting investors
from downside that an election offers is to ensure they have a truly
diversified portfolio.
Trading is risky and your entire investment may be at risk. TC’s available at https://gulfbrokers.com/
Contacts
Syam K.P.
Chief Analyst
+442080689907
support@gulfbrokers.com
