Political events in major economies generate uncertainty that can propagate through global financial markets, influencing investor behaviour and asset prices. The 2024–2025 U.S. presidential election cycle, including presidential debates, assassination attempts, the election outcome, the inauguration, and major policy announcements, such as liberation day tariffs, provides a unique setting to examine these effects. This study investigates how international stock markets responded to these sequential political events, focusing on abnormal returns (ARs) and cumulative abnormal returns (CARs) across G20 countries. Using both mean-adjusted and market models, complemented by cross-sectional regressions, the analysis captures heterogeneous market reactions while accounting for the role of market fundamentals. The results indicate that markets often anticipate events, react strongly to new information, and gradually adjust as uncertainty dissipates. Emerging markets generally exhibited positive reactions, whereas developed markets responded more cautiously or negatively to political shocks. Cross-sectional regression analysis further shows that market fundamentals have a limited influence on ARs but significantly shape CARs, consistent with overreaction and uncertain information hypotheses. Overall, these findings provide evidence on how global financial markets process political uncertainty and underscore the importance of sequential political events for investors, portfolio managers, and policymakers.
Anyikwa et al. (Thu,) studied this question.