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Why investors don’t care about second impeachment of Donald Trump

by LLB Editor
14th Jan 21 11:38 am

The Democrats are getting their wish and the House of Representatives has passed another motion of impeachment against President Trump, following two more in December 2019 but US stock markets seem be taking the news in their stride for three reasons, says AJ Bell Investment Director Russ Mould.

“First, it is unclear whether the Senate will deliver the two-thirds majority required to remove Mr Trump from office, as nearly a third of the Republican in the Upper House will need to support the motion.

Second, President-Elect Biden will be inaugurated on Wednesday 20 January to end Trump’s sole term in office anyway.

Finally, the three previous impeachment episodes of modern times had relatively little impact upon markets, which were influenced far more strongly by the prevailing economic backdrop and the outlook for corporate earnings and dividends. Ultimately, share prices care more about profit than politics.

The Republican Richard Nixon resigned in the second year of his second term in August 1974, after the impeachment process had begun in February of that year and received judicial approval on three counts in July, following the Watergate scandal. The US stock market, as benchmarked by the S&P 500, fell consistently as Watergate unravelled Nixon’s Presidency and the index only bottomed two months after his departure.

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