The formal impeachment inquiry into US President Donald Trump could hurt sentiments,  as he has been a chief proponent for the stock market rally since his ascension to the White House.

This is of global significance as any sharp move in the US markets impacts the world. His policies have led to trade tensions between many countries, including China, Japan and those of the European Union (EU).

For the Indian markets, any sharp up-move in the global value of the US Dollar, against a basket of six currencies, would mean chaos. The rising value of the dollar can lead to a flight towards safety for global funds and thereby, a sell-off in equity markets.

Washington Post columnist Henry Olsen wrote on Tuesday that the Republican President’s “approval ratings are bad news for the Democrats”. After falling to a low of 42.7 per cent earlier this year, they rose to 45.3 per cent on Tuesday. A poll by Emerson, a local data agency, had even put the ratings at 48 per cent, a 2-1/2 year high. This means that more people in the US approved of Trump’s job than earlier this year and hence an eventual impeachment could have less of an impact.

“He’s still lower than a president should be if he wants to be re-elected, but he’s on the way back,” Olsen wrote.

In a quote to Reuters, BB&T Wealth Management Senior Vice President Bucky Hellwig said, “It's not going to happen (impeachment), where you have a Republican Senate convict a sitting Republican president.” He characterised the 1998 impeachment of President Bill Clinton as a “nothing burger”.

After early volatility, Wall Street also weathered the 1998 impeachment of Clinton, who was later acquitted by the Senate. The S&P 500 tumbled 10 per cent in the 11 trading days leading up to October 8, 1998, when articles of impeachment for Clinton were sent to the House. But the index recouped those losses by October 21 and kept rising for the rest of 1998 to end the year up 27 per cent, Reuters said.

Related Topics