Donald J. Trump – the 45th President of the United States – has officially been impeached. This is significant news. Trump is one of only 3 US presidents to have been impeached and soon will stand trial in the US Senate.
But politics aside, what might this mean for the US markets and our own S&P/ASX200 (INDEXASX: XJO)? After all, if the US sneezes, the rest of the world supposedly catches a cold, as the old saying goes.
Well, the first thing to note is how Trump has defined himself as the president of high stock markets. He frequently refers to the new all-time highs that the US markets have been banking over the last few months as a mark of his success.
What's more is the massive package of tax cuts that was passed under his stewardship in 2017. Drastically slashing the rate of company tax that US corporations have to pay put a rocket under company earnings, and has helped prolong the record bull run that global markets have enjoyed over the past decade.
Considering all of this, it's not hard to call Trump a pro-markets/pro-business president (trade wars aside).
But here's why markets aren't panicking over the impeachment. 'Impeaching' is a term that has a lot of feathers but not much meat (to borrow a Paul Keating phrase). Unless two-thirds of the US senate votes to convict him, Trump will be acquitted, and the impeachment would have been for nothing of real consequence. And as his party controls the Senate, the possibility of a conviction is remote at best.
The markets know this and thus knows that the Trump show will most likely roll on, for now anyway.
What does this mean for ASX shares?
Well, if the US markets continue to go gangbusters (which is likely if this trade war truce holds), then the ASX should have some strong upward pressure to follow suit. Record low interest rates both here and in the US are encouraging inflows of cash into the share market as investors of all stripes chase yield.
If interest rates remain low in 2020 and beyond, I expect blue-chip dividend ASX shares in particular to maintain a significant amount of interest from investors. It's a foolish game to predict what the markets will do tomorrow, let alone next year. But I am confident that yesterday's impeachment of a US president is unlikely to have much sway.
