Painting a dire picture of the US economy in the eventuality of Donald Trump’s victory, a forecast by Citigroup said the American stock market will fall by three to five per cent if the Republican presidential candidate wins the White House race. A win for Trump, 70, could take a big bite out of US stocks and the S&P 500 will fall by three to five per cent immediately if he is elected president, Citi said in a note to clients, the bank said citing its latest forecast.
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A victory by Democratic nominee Hillary Clinton, 69, would not move stocks significantly, it said.
A report in CNN money said “Wall Street does not like surprises or uncertainty” and the outlook is based on the bank’s belief that investors would be surprised by a Trump victory, even though the race to the White House has tightened as it reached the last lap.
Citi’s forecast is that Clinton still has a 75 per cent chance to win, despite the announcement from FBI Director James Comey that the bureau discovered additional emails that could be related to the bureau’s investigation into how Clinton handled classified information.
“Heightened polarisation does not bode well for governance, regardless of who wins the election,” wrote Tina Fordham, Citi’s chief political analyst.
“The FBI announcement could increase the risk that if Trump loses, he does not accept the result. If a Clinton victory transpires and she presides over a Republican-controlled or divided Congress, the risk of continuous investigations and possible future impeachment is non-negligible,” Fordham said.
Research firm Macroeconomic Advisers had forecast last month that a Trump win would result in an eight per cent drop in US stocks due to uncertainty about his economic and trade policies.
The Brookings Institute projects a 10 to 15 per cent plunge in stocks if Trump wins.
Clinton and Trump are in a dead-heat in major polls on the final weekend before the presidential election that has the world on edge, with the two rival candidates and their surrogates scrambling through key battleground states that could prove decisive on Tuesday.