In the States a Presidential election campaign is kicking off. While there is a long way to go there is at least a significant possibility of an optimistic scenario from a investor’s point of view developing in the form of a pro business, anti-regulation Republican winning office. Equities markets tend to respond to this enthusiastically, even if much of the rest of the world is not so keen.
Even if the Democrats retain occupation of the White House it is not likely to cause much negative sentiment in markets given they are far from anti free market in the way parties on the left of the debate are in other parts of the world.
Political matters on this side of the Atlantic have little potential upside at least in the short term, and present a clear risk of seriously spooking markets.
There is no general election to worry about, but the British government has committed to holding a referendum on membership of the European Union by the end of 2017, and many think it will be held much sooner.
The latest polls indicate that the vote would be close if held tomorrow and the momentum seems to be on the side of an exit at the moment. There is plenty of time left for things to change and change back again several times, but this kind of uncertainty is almost guaranteed to reduce market confidence during 2016.
