The most interesting part of the above graph is how FEW see a sell-off under Romney. There seems to be this odd belief, despite the facts, that Republican policies are better for markets. However, history would say otherwise as the chart below shows from CMC Markets going back to 1900.
The stock markets have returned an average annual return of 15.31% with Democrats vs 5.43% with Republicans. Now some may correctly point out that Republican policies have changed over this long time-frame. However, the trend holds over the last 50 years as well as this chart from Janus Funds highlights (link is to their white paper: Market Performance and the Party in Power).
Furthermore, the Barclays survey also highlights how investors think the BOND markets would initially react to a Romney win.....yep they think bonds would sell-off.
Granted the question only refers to the "knee-jerk" reaction, but again, why would the market react this way when history has shown that the BOND markets are what actually has done better during Republican presidencies? This is also illustrated by the Janus Funds paper as seen below.
Clearly it is bonds NOT stocks that have done better under Republicans. I think Jeremy Grantham may have addressed investors misguided belief best in a recent interview with Charlie Rose.
"These capitalists who are desperate to elect Republicans should study their history books." ---Jeremy Grantham
Now, having said all this, I do not actually think it actually matters whether the president is Republican or Democrat. The powers of secular market cycles, valuations and events outside of any presidents control is what truly drives the market. For instance, the S&P 500 was up 26% in 2009, a gain which is attributed to Obama despite the fact that he just took over office. The reality is the market would have bounced off it's lows in 2009 even if McCain was president.....Besides, Democrats and Republicans?? They both push the same agenda in reality......