Market volatility How would a government shutdown affect market volatility?
A government shutdown can lead to short-term market volatility, but they generally resolve quickly with minimal market impact for long-term investors.
Trade and investment, tax, immigration, and fiscal policies, and his approach to the Fed may impact some investments.
Tax-advantaged investments, REITs, the US dollar, and select industries and companies may be influenced to some extent.
Monetary policy is likely to have greater influence on stocks than any legislation or executive action.
With Donald Trump taking office, investors are wondering what his policies may mean for the markets and economy. We believe, however, that investors often overstate the federal government’s impact on broad financial markets. Monetary policy will likely influence markets more in the next few years than any legislation or executive action. Ultimately, policymaking is about setting priorities. No administration gets everything it wants, nor do markets necessarily respond to political initiatives in obvious ways.
Based on campaign pledges and post-election activity, we’ll be watching for five key things from the new administration.
A government shutdown can lead to short-term market volatility, but they generally resolve quickly with minimal market impact for long-term investors.
Markets got the clarity they crave with Donald Trump’s decisive victory in the presidential election. Now the focus shifts to taxes, deficits, tariffs, immigration and more.
Voters, party leaders, and down-ballot candidates have had to quickly shift gears from a Trump-Biden rematch to a Trump-Harris showdown in the 2024 presidential election.
Important information
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All investing involves risk, including the risk of loss.
In general, stock values fluctuate, sometimes widely, in response to activities specific to the company as well as general market, economic and political conditions.
Investments in real estate related instruments may be affected by economic, legal, or environmental factors that affect property values, rents or occupancies of real estate. Real estate companies, including REITs or similar structures, tend to be small and mid-cap companies and their shares may be more volatile and less liquid.
Stocks of small-sized companies tend to be more vulnerable to adverse developments, may be more volatile, and may be illiquid or restricted as to resale.
Many products and services offered in technology-related industries are subject to rapid obsolescence, which may lower the value of the issuers.
The opinions referenced are those of the authors as of Jan. 23, 2025, are based on current market conditions, and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals. These comments should not be construed as recommendations but as an illustration of broader themes. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties, and assumptions; there can be no assurance that actual results will not differ materially from expectations.
The document contains general information only and doesn’t take into account individual objectives, taxation position, or financial needs or constitute a recommendation of the suitability of any investment strategy for a particular investor. Investors should consult a financial professional before making any investment decisions.
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