Macro Minutes: US Elections & Equity Markets

Key Points

Markets do not favour Democrats or Republicans, however returns in election and inaugural years differ with election results.
Investors tend to celebrate Republican victories in election years, whereas equities struggle when a Democrat is elected. Those trends, however, usually reverse in inaugural years.
In analysing corporate, personal income, and capital gains taxes over time, we find they don’t influence equity returns in any predictable way.

Investing in financial markets involves a risk of loss and there is no guarantee that all or any invested capital will be repaid. Past performance neither guarantees nor reliably indicates future performance. The value of investments and the income from them will fluctuate with world financial markets and international currency exchange rates.