Moneywise: POLLING POWER; What Happens in the American Presidential Election Can Affect the Money Markets in Britain

Article excerpt


DOES it really matter to you who the next President of the United States is going to be? You may not be interested in politics but if you are an investor in the stock markets or your pensions fund invests in equities then perhaps should be paying more attention to what's going on across the pond.

The accepted wisdom is that a Republican president like George W Bush is better for your wallet.

New research from Halifax Financial Services shows how previous campaigns have affected the performance of the Dow Jones and FTSE 100 over the last 50 years.

Since the end of the Second World War, there have been 14 presidential elections - eight have been won by Republicans and six by Democrats.

The average rise on the Dow Jones during a Republican presidency is 37 per cent, compared with 46 per cent during a Democrat presidency.

In 1984 the FTSE 100 was established, and the index saw the largest rise during a presidential election that year, when Ronald Reagan won a second term.

There have been five presidential elections since 1984, and the largest fall during a campaign occurred in 1988, when George Bush Snr won.

Generally, the FTSE-100 appears to closely follow the performance of the Dow Jones during presidential elections.

Both indices rose in the run-up to Ronald Reagan's election and fell during George Bush Snr's campaign, although the strongest rise on the FTSE 100 was seen during Bush Snr's term in office. …