You might have been headlines recently about the US President Donald J. Trump standing trial on charges of obstruction of congress and abuse of power.
Such a significant event taking place at the centre of power in the world’s largest economy might elicit feelings of worry or trepidation amongst investors. And as we all know, uncertainty and political upheavals aren’t exactly a recipe for rising share markets under most conditions.
The politics of the trial over in the US aren’t helping either. You might see stories like ‘the country’s fate is hanging on the outcome’ and ‘the impeachment hoax’ coming out of both sides – which doesn’t lend to a feeling of calm.
But how much will this trial actually mean for the S&P/ASX 200 (INDEXASX: XJO) and us as ASX investors?
Well, probably not that much at the end of the day. See, what the US President is facing is not your typical criminal trial that we’re all used to seeing on television or the movies. In the US constitution’s somewhat… unique design, a President can only be removed from office by what’s known as the ‘impeachment process’.
The Impeachment Process
Impeachment involves assessing the President’s alleged misconduct by the lower house of Congress (which has already happened). If the House decides that the charges are warranted (which they did), the President is ‘impeached’ (which happened last year) and the case is sent to the upper house, the Senate.
And that’s where we stand today. After hearing arguments from the prosecution and defence, the 100 senators will act as a jury of sorts and vote whether to remove the president from office. A conviction would require a two-thirds majority of 67 senators.
But here’s why this whole trial ‘thing’ doesn’t really matter for the ASX or global markets in general.
Donald Trump is almost guaranteed to avoid being removed from office. His party (the Republicans) hold a 53 – 47 majority of Senate seats. That means almost 20 senators from his own party would have to jump ship and vote to axe their captain (unlikely).
And even if Trump was removed in a shock vote, his Vice President Mike Pence (also a Republican) would simply take up the reigns as President – no fresh election required. It’s very doubtful Pence would change the Trump administration’s policies in any drastic manner if this unlikely scenario played out.
That means that the massive tax cuts, favourable tax changes and other pro-market, pro-business policies that have come to define the Trump Presidency (and the share market gains of the last few years) will likely continue.
So from either outcome, I don’t see there being any major impacts on global markets from the trial that Donald Trump is currently facing. Therefore, if you’re seeing the headlines coming out of the US at the moment and they’re making you take stock with your own investments, in my humble opinion, there’s not much to see folks!
The post Here’s what Donald Trump’s trial means for ASX shares appeared first on Motley Fool Australia.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020