Dubai: Global stock markets have been largely unfazed by the news of President Trump being impeached, as investors widely expected the US Senate to vote against his removal from office.
Trump became the third US president in history to be impeached, as the Democratic-led House of Representatives voted to impeach Trump on two counts this morning, namely abuse of power and obstructing Congress. Trump has been impeached over allegations he tried to use military aid to pressure Ukraine’s President Volodymyr Zelensky into investigating his political rival Joe Biden, who is front-runner to take on Trump in the 2020 election.
Investors widely expected this to happen as stock-market indexes, hardly reacted on Thursday after earlier finishing at near all-time highs. Wall Street has mostly shaken off the prospect of impeachment, with S&P 500 and Dow Jones Industrial Average both edging up 0.1 per cent.
“It’s a fairly moot point in terms of market and economic implications, especially in the near term,” said Daniel Marc Richards, MENA Economist at Emirates NBD. “The development had been long expected and given that it is highly unlikely to pass the Republican-controlled Senate, the political risk is limited.”
“Markets did price the risk and anticipated the final results of the vote that is why we did not see a major change in the prices,” said Mohamed Zidan, Chief Market Strategist for ThinkMarkets in Dubai, adding that the vote was more symbolic than a serious step as Democrats look to weaken current US president’s chances before the coming election. “It is still difficult for Democrats to get the Republicans on their side in the Senates votes as we see saw yesterday not one Republican voted for the charges.”
The historic clash is not creating more unease in financial markets as all signs indicate that the Republican-controlled Senate won’t vote to remove Trump from office, when it holds a trial mostly by early January.
An investor survey conducted by Canada-based RBC Capital Markets found that market participants have grown more comfortable over time with a scenario in which the president is impeached, but not convicted.
“If there was a bigger risk that Trump would be removed from office, with one or two Senate Republicans defecting, that could spark a bit more anxiety in the markets,” says Adam Crisafulli, founder and president of Vital Knowledge Media. ”If we see a shift in momentum after the Senate vote, this would be a major catalyst for high volatility and major sell-off in stocks which could initially erase 5—10 per cent of S&P 500 value,” Zidan said.