Political news and stock prices: evidence from Trump's trade war
This study investigates the impact of political news on stock price movements. Analysing
more than 3,200 tweets from US President Donald Trump's Twitter account, we find that
tweets related to the US-China trade war negatively predict S&P 500 returns and positively
predict VIX. Granger causality estimates indicate that the causal relationship is one-
directional–from Trump tweets to returns and VIX. Finally, the results vary across industries
depending on their degree of trade intensity with China.
more than 3,200 tweets from US President Donald Trump's Twitter account, we find that
tweets related to the US-China trade war negatively predict S&P 500 returns and positively
predict VIX. Granger causality estimates indicate that the causal relationship is one-
directional–from Trump tweets to returns and VIX. Finally, the results vary across industries
depending on their degree of trade intensity with China.
Abstract
This study investigates the impact of political news on stock price movements. Analysing more than 3,200 tweets from US President Donald Trump’s Twitter account, we find that tweets related to the US-China trade war negatively predict S&P 500 returns and positively predict VIX. Granger causality estimates indicate that the causal relationship is one-directional – from Trump tweets to returns and VIX. Finally, the results vary across industries depending on their degree of trade intensity with China.
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