Australia is a small country, which means it’s sensitive to global shifts. Any slowdown in the US economy, or turmoil in US politics is likely to have a significant impact here.
So here’s what it would mean for Australia if the Democrats win the House of Representatives.
But first, we should talk about the Trump-sized impeachment elephant in the room, as this could play an important part. If the Democrats win for a majority in the House of Representatives, it will mean they can begin filing impeachment proceedings against US President Donald Trump.
Yet when it comes to actually filing for an impeachment, this takes time and political persuasion. Many are waiting to see what’s happening with special counsel Robert Mueller’s ongoing investigation into the alleged 2016 election interference claims. And taking into account that the last two presidents to have impeachments filed against them escaped a successful attempt.
In order for the US house to impeach President Trump, they will need a majority vote. If that happens, the senate will then still need a two-thirds majority to effectively file Trump’s impeachment.
If you are one of the few sitting back, thinking that impeachment or not, it won’t really affect Australia…perhaps you should rethink.
Find out three actions you can take to protect your cash and financial privacy here, in Bernd Struben’s free report.
How impeachment has affected the stock market
Impeachment seems to pull up a mixed bag when it comes to its effect on stock markets. It’s a general rule that stock markets, ASX included, don’t like uncertainty.
When Congress began filing impeachment against former US President Richard Nixon in 1974, the market was bearish (1973–74), plagued with an oil crisis and a collapse of the world’s foreign exchange rate system. The S&P 500 dropped over 30% in the month of October that year. Nixon later resigned from office.
But when the house voted to impeach former US President Bill Clinton in December 1998, stocks kept rising, pushed by the last stage of the internet boom. This boost lasted for five consecutive months on the S&P 500, until Clinton’s acquittal only two short months later, in February 1999.
And so, when we consider today’s current economic state and the US’ looming trade War with China, it’s easy to see how this could negatively impact Australia. Not to mention that when Wall Street falls, other global markets, Australia’s ASX included, sees a bit of a domino effect. That means that anyone with a superannuation fund could be in trouble, as an early retirement for Trump may mean that you have to work longer.
Currently the US is dealing with what is one of the closest votes in mid-term election history, with 40 million early voters — far more than the 27 million who voted in the last Congressional elections, in 2014.
According to Commonwealth bank currency experts, if Trump is impeached this could result in the US dollar facing downward pressure. That generally means the Aussie dollar will rise.
PS: If you think your cash is safe in the bank…think again. Find out what you could do to protect your cash and financial privacy here.