Stock Markets Likely to Shrug Off Impeachment, with Investors Expecting Trump to Remain in Office

Although recent indicators have stoked fear of a weakening U.S. economy, investors aren't worried that the impeachment inquiry against President Donald Trump will tank markets.

Newsweek spoke with 20 economists about whether the impeachment proceedings would spook investors and how markets would respond during the process.

While Trump's removal from office would create tumult among the indices, 10 explicitly said investors thought that Trump will be impeached. But the economists also overwhelmingly indicated that investors are not currently focused on the impeachment proceedings and didn't think Trump would be removed from office by the Senate.

"Most importantly, the stock market follows economic fundamentals," Mickey Levy, Chief Economist for Americas and Asia at Berenberg Capital Markets, told Newsweek. The "stock market rallied during Clinton's proceedings as [the] economy boomed; it fell hard during Nixon proceeding as [the] economy was in deepening recession following oil price shock. [The] market understands that impeachment will not affect policies and will not result in [the] Senate voting to remove Trump from office."

The House's vote would have political implications for the 2020 election. But it wouldn't lead to Trump's removal from office; the Republican-controlled Senate holds the duty to convict.

Republicans have largely banded together to depict the calls for impeachment as an unjustified political attack, based on an ongoing Democratic effort to undo the 2016 election.

A recent CNN poll found that 47 percent of the public now backs impeachment, a 6 percentage point increase since the end of May. And although CNN found that moderate Republican support for impeachment had increased from 16 percent to almost one-third over the same time period, other signs indicate the Republican base is hunkering down. Quinnipiac found that the amount of Republicans expressing strong support for Trump rose 12 percentage points since last week.

Given Republican public support for the president and the GOP majority in the Senate, Trump's removal from office seems unlikely, unless new evidence against the president emerges.

"So far we haven't seen enough evidence that we're going to see regime change in Washington," James Angel, a professor at Georgetown University's McDonough School of Business, told Newsweek.

For now, analysts are watching website PredictIt.org, which in the days after the impeachment inquiry began, showed just a 20 percent chance that Trump would be removed from office. With prospects for Trump's removal from office remaining low, analysts said the markets will be driven by the economic topics that have sparked stock volatility in recent months.

"Investors are focused on the state of the U.S. and global economy, Brexit, [the] upcoming Fed meeting and the upcoming meeting between U.S. and China on trade," Ryan Sweet, an economist at Moody's Analytics, said.

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President Donald Trump speaks during the Armed Forces Welcome Ceremony in honor of the Twentieth Chairman of the Joint Chiefs of Staff on September 30, BRENDAN SMIALOWSKI/AFP/Getty Image
Stock Markets Likely to Shrug Off Impeachment, with Investors Expecting Trump to Remain in Office | News