The events of 6 January, in which protestors stormed the US Capitol, has led to a second impeachment of president Donald Trump. However, given the limited time Trump has left in office it is unlikely to impact markets significantly.
Trump stands accused of inciting the armed riot in a speech given at the White House earlier on 6 January, when the US president "repeatedly issued false statements asserting that the presidential election results were fraudulent and should not be accepted”.
"President Trump gravely endangered the security of the US and its institutions of government, threatened the integrity of the democratic system, interfered with the peaceful transition of power, and imperilled a coequal branch of government,” the article of impeachment noted.
US House votes to impeach Donald Trump for a second time
Source: United States House of Representatives
The House of Representatives voted 232 to 197 in favour of impeachment, with 10 Republicans joining the Democrats. Contrastingly, when Trump was impeached for the first time over a year ago it was done so without a single Republican vote.
“Today, in a bipartisan way, the House demonstrated that no one is above the law, not even the president,” said Nancy Pelosi, the Democratic speaker of the House.
But Mitch McConnell, the Senate’s senior Republican, said he did not intend to reconvene the upper chamber of Congress before 19 January, one day before Joe Biden’s inauguration.
With a week left in his term, Trump will not become the first president to be removed from office through impeachment. However, during the trial over the next couple of months, senators can vote to bar Trump from holding public office again, casting doubts over his plans to run again in 2024.
Craig Erlam, senior market analyst at OANDA Europe, noted that “there's a lot of US political noise now as far as the markets are concerned”, following the riot on Capitol Hill and Trump’s historic second impeachment.
“But it’s having minimal impact on the markets,” he added. “Investors are far more concerned with the incoming administration and what that means for stimulus prospects and inflation. Soothing words from Fed policy makers over the last 48 hours have helped take the edge off the yield moves, which could provide some relief. I guess we'll see in the coming days just how much.
“Should we see the 10-year drop back below 1 per cent, it would suggest investors are far more at ease with the Democrats stimulus plans and could be bullish for stock markets, no longer held back by the prospect of premature Fed tightening.
“The political distraction will likely remain ahead of the inauguration next week as security is ramped up. Any hopes of an impeachment trial in the Senate over the next week have been quashed by majority leader Mitch McConnell who dismissed the idea of reconvening for a trial before Trump leaves office.”