HOW POLITICAL CLIMATES AFFECT THE FINANCIAL MARKETS
On a global scale, politics affect currency when a country’s trust is lost or challenged. The opposite can be said in the lead up to a major political event, when the change in power can be perceived as positive. “The hope is that a new leader might make changes that boost a country’s economic growth potential or improve its financial outlook,” according to a very interesting study from Charles Schwab.
The article examines some of the global market changes of when a major political reform may occur. But just as when a so called ‘negative’ political event occurs, and the markets are hit but bounce back, the positive happens. “The effect of an initial burst of political enthusiasm may not be durable. Stock markets tend to be disappointed as the honeymoon vibe wears off.3”