Trading days around US presidential elections

How does the UK market trade in the days around US presidential elections?

US presidential elections are held every fours years on the Tuesday following the first Monday in November (hence they are always between 2nd and 8th November). The newly elected president takes office at midday on Inauguration Day (20 January the following year).

In 2016 the US presidential election will take place on 8 November.

The table below shows the results of analysing the FT All-Share index for the 9 days around each US election since 1972.

  • Days 1-4: are the four trading days leading up to the election
  • Day 5: is the election day
  • Days 6-9: are the four trading days following the election
Day 1 2 3 4 5 6 7 8 9
Proportion of days up(%) 45 73 64 55 64 55 45 55 45
Average daily return(%) 0.56 0.33 0.39 0.36 0.64 -0.18 -0.49 0.29 -0.39
Standard deviation 2.45 0.66 1.11 1.05 1.35 0.95 2.09 1.17 1.28

The average return for each day is shown in the chart below.

FTSE All-Share around US presidential elections [1972-2012]

As can be seen, the UK market tends to trade stronger in the four days before the election, and is weaker in the few days following the election. The strongest day of the period has been the election day itself.


The above is an extract from the Harriman Stock Market Almanac.

See also: other articles on politics and markets.

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US Democrat/Republican president portfolios

Market performance by president

The chart below shows the performance of the UK market (FT All-Share index) over the periods the respective US presidents were in office.

FT All-Share return over US presidential terms

From the point of view of the UK market the best president was Jimmy Carter – the market rose 145% during his 4 years as president. The worst spell was the second term Richard Nixon when the market fell 42%.

Market performance by party of the president

The chart below plots the values of two simulated portfolios both starting with a value of 100 at the 1948 US presidential election:

  • Democrat portfolio: only invests in the UK stock market when there is a Democrat in the White House, and is in cash when the president is a Republican.
  • Republican portfolio: reverse of the above.

Democrat v Republican FTSE All Share Portfolios

The two portfolios have largely tracked each other closely until the 2008 election of Barack Obama. From this period, the Democrat portfolio performed strongly, such that by 2016 this portfolio had a value of 1344 compared with a value of 639 for the Republican portfolio.


See also: other articles on politics and markets.

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