Question

How does political issues affect the stock market? Please explain in detail.

Answer 1

The stock market doesn’t like uncertainty, and are highly volatile and react actively to economic and political issues. There’s exists a complicated relationship between the stock market and political conditions. Sometimes the investors are cheered by the election of a candidate, such as if before the presidential election Mr. Trump were to start polling strongly against Mrs. Clinton shortly, although still pledging to introduce tough protectionist trade policies, the stock market would most likely sell off on fears of how such policies may affect the economy. Mr. Trump, who seems likely to roll back regulations and embrace corporate tax reforms. However what is good in the short term may not turn to be good in the long term. A danger of taking credit for stock market highs (for instance Mr. Trump did last summer in 2017, when tweeted that Stock Market of U.S. is up by nearly 20% since Election. Once politicians tie themselves to the stock market fluctuations, they own it — for better or for worse

There are other numerous factors too that affect stock market. The only time political issues affect the stock market is when they alter the economic landscape where companies are doing business. Also if politicians want to gain credit for market gains, investors and the public must take the politicians’ crowing with a (higher) grain of salt.