News of a possible U.S. presidential impeachment tends to shake the markets, as evidenced by the sell off immediately following the news that an impeachment investigation has started against U.S. President Donald Trump. But that downturn appeared to be short-lived, and analysts are now remembering that impeachment doesn’t necessarily spell disaster for the markets; it may actually usher in a new uptrend.
CNBC analysts noted that during President Bill Clinton’s impeachment, markets actually did rally. It’s important to remember that even if Trump is impeached by the House of Representatives, it is also highly likely that the move would be confirmed by the Senate, making the impeachment effort essentially useless.
Additionally, J.P. Morgan analysts are quick to point out that there are many other factors that can move the markets more than the threat of impeachment, the biggest of which is probably the trade war with China. On Wednesday, President Trump announced that a trade deal with China may be closer than expected, sending the markets immediately higher. The NASDAQ closed up 1.05 percent, the S&P 500 ended 0.62 percent higher, and the Dow Jones Industrial Average closed up 0.61 percent. Also boosting market optimism was data released on Wednesday showing that the sale of U.S. single-family homes rebounded more than expected last month.
Several Asian stocks followed Wall Street higher on Thursday. Japan’s Nikkei 225 gained 0.28 percent after trading down on Wednesday, and Hong Kong’s Hang Seng Index was up 0.10 percent as of 1:20 p.m. HK/SIN, starting the recovery from Wednesday’s steep sell off. South Korea’s Kospi and Australia’s ASX 200 were both unable to reverse the downtrend started on Wednesday. Neither could China’s benchmark indexes; the Shanghai Composite was down 0.69 percent while the Shenzhen Composite slumped 2.34 percent by the early afternoon.
On the currency markets, the dollar was originally able to hold onto Wednesday’s gains, but it slowly relinquished them, sliding 0.12 percent against the yen to 107.66. The euro rose 0.15 percent against the greenback to $1.0957 while the British pound was up 0.13 percent go $1.2365.