To Australian financial analysts the election makes little difference to the market, although Bloomberg has calculated that since 1928, the S&P 500 has climbed 9.3 per cent in the 12 months after the Democratic Party captured the White House, based on the median change.
Only once did the benchmark for US equities decline, and this was after Jimmy Carter’s victory in 1976. In the Republican camp, five presidential incumbents, including Herbert Hoover, Richard Nixon and George W Bush, preceded stock-market declines, with a median retreat of 4.3 per cent for the group, figures compiled by Bloomberg show.
The data excludes incumbents that won re-election. Overall, the S&P 500 generated a median 62 per cent advance from the time a Democrat is elected in November. For Republicans, the gain is 28 per cent.
Today’s history is new. Things are happening for the first time. When the tech bubble burst in 2000, it was something new for the markets and today’s global financial crisis is new again.
The new president is a definite signal to the world that the US too is ready for drastic change.
It is difficult times for us all but the message that this has given is that the need for change has been recognised and turning towards the more visionary solution has been encouraging. For many in the US and most outside, Barack Obama was a complete unknown 22 months ago.
However, in less than two years’ campaigning he has inspired the nation. The changes he has foreshadowed in his campaign gives hope that others with vision will be given similar support in government and in business – and this is a good sign for us all.
