Stock market rebound augurs well for Obama’s re-election

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Washington, Aug. 15: President Barack Obama has 60 percent chances of getting re-elected in November’s US presidential election because of rebounding share prices, according to fund management giant Fidelity, but other big investors are not so sure.

Trevor Greetham, asset allocation director at Fidelity, has cited a research by Intrade, a prediction market, recognizing economic events could yet favour Republican presidential contender Mitt Romney.

“As an incumbent, the election is President Obama’s to lose. The President’s odds of winning over the last couple of years have closely mirrored the profile of the S and P stock market index,” the Telegraph quoted Greetham, as saying.

“This relationship suggests that we could see a Republican president if the market dips between now and November – and with Mitt Romney choosing Paul Ryan as running mate, aggressive government spending cuts could follow,” Greetham added.

David Blake of Jupiter Asset Management, however, said: “Historically, stock markets do tend to rise in an election year and, while this has often been the case in the past, it is important to bear in mind exogenous factors which may affect markets”.

“There are currently several non-domestic factors which may yet influence markets, not least of which is Greece and the Euro, a situation which is far from resolved and is likely to come back on the agenda once the summer lull is over,” he added.

According to the report, Andrew Bell, chief executive of Witan Investment Trust, pointed out that markets may respond in the opposite way to that expected by many, and that assumptions about a Romney presidency may be mistaken.

“Given that some of President Obama’s big-government, whack-the-millionaires and billionaires policies are not popular in the business sector, the market could well rise if it looked like he was going to lose – or fall if it looked like he would win,” he said. (ANI)