As the 2016 election nears on Tuesday November 08, 2016, many market participants found themselves undecided and discontented between the two presumptive nominees, Hillary Clinton and Donald Trump. We must realize that the election could have the most impact on the future of the nation than any election ever before. A nation that faces nearly 20 million dollars in debt, more than doubling its debt in the last eight years, a true leader must be elected in coming few days.
Effect of US Elections on Indian Stock Market
If Hillary Clinton Wins: If history is a guide, a Clinton presidency would be better for the stock market. The average annual return of the Dow Jones Industrial Average Index (DIA) from 1901 through September 2016 has been 4.5%, Under Democrat presidents; the index has returned 7.0% on average, while Republican administrations have seen a 3.0%. It is found that the annualized gross domestic product, growth was 1.8 percentage points higher under Democratic presidents versus Republican. The win of Clinton in Indian market will help Nifty to move towards 9000-9100 band.
If Donald Trump Wins: Trump would be a wildcard because of his lack of predictability. The equity market is worried about a Trump victory, about the uncertainty of policy under Trump. With a Clinton win, the market would rally but not as much as it historically has when an incumbent party wins. “It depends now on how a Democratic win is already built into the market. If that’s the case, then I would say a Republican win would mean a sharper down, but then a sharper up to follow. Victory of Trump may force Nifty to take a knee jerk reaction first to take it down to 8100-8200 band and from there it can sharply recover back to 9000 zone.
Effect of US Elections on Gold
If Hillary Clinton Wins: If Hillary Clinton is elected, we feel the run up in gold price won’t be quite as strong as she is more mainstream and probably the economy will be less likely to suffer setbacks. Despite the ongoing political turmoil in America, financial markets will welcome the election of Clinton. Markets will calm and breathe a sigh of relief. Clinton will continue Barack Obama’s legacy and will not be able to make radical policy changes. She is thinking about a policy issue, she’s going to want to hear from the business side, the consumer side, the labor side, and in that regard, her positions may not be starkly black and white.
If Donald Trump Wins: A victory of Donald Trump in the US presidential election would probably lift gold prices as this election is likely to act as the next big catalyst for precious metals prices. The US vote will have more impact on bullion than the UK referendum. If Donald Trump gets elected, it will stimulate some fear within the economy. Gold prices are quoting at $1305 an ounce which rallied 23 percent this year on demand for haven assets following the UK’s vote to leave the European Union and as the Federal Reserve refrains from raising rates.
Effect of US Elections on Crude Oil
If Hillary Clinton Wins: Hillary Clinton has a vastly different view on the energy market. Clinton’s plan to make the country a “clean energy superpower” would be negative for Crude prices. She wants to cut US oil consumption by a through the use of cleaner fuels within 10 years of her taking office. If Clinton wins the election, she will maintain the status quo in relation to America’s intervention in Syria. American people see her as a foreign policy hawk but she has been burnt once for her support of the Iraq War. In the long term, Clinton’s plan for clean energy that might offer enough substitutes to put downward pressure on the price of oil.
If Donald Trump Wins: Donald Trump’s anti-muslim mentality is perhaps the biggest obstacle to maintain peace in the Middle East and his victory could deliver ISIS and Al-Qaeda a signal from the US as the number one enemy. If Trump does introduce a ban on Muslims entering US territory, he will put Washington on a collision course that will create a fresh geopolitical tension in the Middle East. As a result, it could lead to spikes in the oil prices. ISIS knows exactly what they are doing when they target the oil fields and installations of Kirkuk. A sharp reduction or the threat of any sharp reduction in supply will do more to affect the price of oil than any oil production deal between Russia and OPEC.