Everyone has probably heard of the #BlackLivesMatter riots, which have been going on in the United States for a while. However, international financial markets seem to have been underestimating this event, which happens to be the biggest riots in the USA in 50 years! Why is that?
According to the economists working for Pekao Bank, the new trading week in financial markets started optimistic despite the growing tensions in the US-China matters. They say that the optimism came due to the fact that there's no materializing the political risk or toughening the rhetorics from both sides.
Why do the markets keep ignoring the US riots?
To start with, that's because of the history. The USA spent almost the entire 1960s in the environment of social disturbance, riots, manifests, and political violence (which led to a series of deep legislatory changes). At this point, it's impossible to peg any of those historical events to the the changes in stock indexes seen back then since the indexes kept on growing almost without any major deviations over the mentioned period.
Secondly, any malfunctioning caused this time seems to be nothing compared to the aftermath of the social distancing caused by the COVID-19 pandemic in terms of its impact on the national economy, the experts say.
At the same time, they say that the election results often have the biggest impact on the markets, and the very fact that this is the election year in the USA may mean that the markets are not going to show a major reaction until the election in November.
The experts say that there are some reasons to think that some of the uncertain voters may dump Biden in favor of Trump.
However, Pekao points to the latest opinion polls, which say that Trump trails buy 5-6% in the election race.
