The past few months have seen a number of elections at the state and federal level, while other countries have been faced with even more dire decision-making, such as the upcoming Brexit vote in the UK on June 23. In light of an ongoing number of crucial votes in 2016 however, many brokers have opted to introduce election barometers or trackers to help weigh and measure sentiment in financial markets.
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Today, CMC Markets recently unveiled a new offering that tracked Australian federal election investor sentiment. More specifically, CMC introduced its Markets Election Sentiment Index (ESI), which utilizes international benchmarks to examine the relative performance of the Australian share market during the 2016 Federal Election campaign.
In this instance, CMC’s ESI helps isolate out the impact of shifting political currents on Australian investment. However, the broker is not alone in implementing such indices as market participants are always keen to have a grasp on the prevalent impact of elections or votes. Earlier this year IG Group also implemented an election tracker for the London mayoral election, one of the group’s premier financial centers.
Sentiment and Data
Back in February, IG Group also introduced its US election barometer, which tracked the US primaries leading up to the presidential election in November. Relative to other votes, this election stands to be one of the most divisive and polarizing in recent US history. Perhaps of greater note is the impact it could yield on financial markets, given the possible ascension and bid of Donald Trump.
Brokers utilizing data to craft barometers or sentiment indices will likely be very important in H2 2016 and beyond. Many individuals anxiously eye key events to dictate market trends, which depending on the scope or influence, can easily yield tangible moves across stock, commodities, or foreign exchange (FX) markets.
In the more immediate interim however, most currency markets are dialed into the Brexit vote this month. Hundreds of venues have given their predictions on the vote itself, many of which rely on the same data used to engineer the aforementioned indices. The market for this data has never been bigger and it's likely the industry will see more of these instruments and indices as we approach events that promise to garner higher volatility.
