Over these last few months, many investors have witnessed significant market movement after political speeches and tweets. It is true that influential political figures have a major control over the market, a few positive words can cause a sharp rise or decline. To understand this phenomenon ,i’ve researched the statistics to come to a conclusion on just how much these figures can influence. I hope you find my research knowledgeable.
1)Donald Trump
According to an academic study in 2019, Results backed with statistics show Donald Trump being associated for negative effects on the stock market mainly the S&P 500.
Another study shows that tweets posted by Donald Trump on an average cause a 0.25% abnormal increase/decrease depending on the tweet.
2)Mario Draghi
In 2012, Mario Draghi’s famous “Whatever it takes” speech caused Italian government bond yields to fall by 46 basis points. This is equivalent to a 7% reduction in borrowing costs from the speech alone.
In conclusion, important individuals have the great power to influence the market with their words. This showcases the importance of knowing the global news as an investor.
Aarav Bhagwat
\\-High school student at Gems Modern Academy