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The 2016 U.S. presidential election and the Stock, FX and VIX markets

Imlak Shaikh

The North American Journal of Economics and Finance, 2017, vol. 42, issue C, 546-563

Abstract: The U.S. presidential election is one of the global political events that have the profound effects on the Global Financial Markets (GFMs). The aim of the study is to examine Stock, FX and VIX markets under the U.S. presidential election 2016. The findings strongly suggest that ‘U.S. presidential election effects’ hold in equity and FX markets across the GFMs. The empirical outcome signifies that markets are inefficient in the short-run (election year) and allows the opportunity to make abnormal gains from the market. The ‘Republican president elect’ has shown negative effects on the Nifty50, S&PASX200, and IPC equity markets while FTSE100, DJIA, Top40, EuroStoxx50 and Nikkei225 have reported positive returns. The Trumps’ proposal on international trade has caused major loss in the global currency market against the U.S. dollar. The investors’ sentiment to be measured extremely low on the poll announcement day but VXJ and AXVI based market participants have shown very high degree of concern. The Bearish-run election effects to be observed during the election period while post election period has shown Bull-run effects (Asia-pacific markets).

Keywords: Stock market; U.S. presidential election; Stock returns; FX market; Implied volatility index (search for similar items in EconPapers)
JEL-codes: G11 G14 G15 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:42:y:2017:i:c:p:546-563

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