Politics now driving markets more than ever before - and education is key for investors

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The level of global political turmoil being felt is perhaps greater than at any other time in living memory. It has brought change across the world and has led to a heady, powerful mix which makes the current climate truly unique.

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One key moment was of course, the referendum which paved the way for the UK to leave the EU. Closely followed by the election of Donald Trump, there has been a driving of uncertainty and daily unpredictability in everything from stocks, commodities and currencies around the world.

Donald Trump is, undeniably, a different proposition to most politicians altogether and his daily barrage of politically contentious statements executive orders and tweets means that social media is now another channel which can influence markets. We have seen gold enjoy a comeback of sorts, possibly due to its “safe-haven” status in times of trouble.

But the winds of political change are not confined to the UK or US. Following political reform votes in Italy, it is feared, Marine Le Pen, the far-right politician who wants France to leave the European Union, may gain power. Worries over that possibility appear to be driving investors into the other safe-haven trade of German bonds. The wider result is that for the first year in almost a decade, the biggest driver of market sentiment is not from monetary policies of central banks around the world, but from politics and power.

One of the reasons for this is that markets are less able to discount politics in the same way they can discount economic data. For investors, it means there is certainly a bigger need to stay abreast of world events, and key moments in the political calendar. Before decisions are made, a greater degree of information must be taken in and acknowledged, and it should come from a variety of sources.

But companies which deal with day-to-day investors also have a duty to inform. They should seize the opportunity to do so via all available channels.

At ActivTrades, we pride ourselves on our market updates and news output to educate clients across the many countries we operate in.

We believe financial education is of vital importance – and is not only an interest to investors, but, in these shifting political times, a must.

Alex Pusco is founder and CEO of online broker ActivTrades.

All financial products traded on margin carry a high degree of risk to your capital. They are not suited to all investors, please ensure that you fully understand the risks involved, and seek independent advice if necessary.

ActivTrades PLC is authorised and regulated by the Financial Conduct Authority (FCA) , registration number FCA 434413

The thoughts and opinions expressed here are solely those of the writer and do not necessarily reflect the view of ActivTrades Plc. This commentary is for information purposes only and should not be considered investment advice. Any forecasts given are not a reliable indicator of future performance and the decision to act on any ideas and suggestions presented is at the sole discretion of the reader.

 

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