Approaching US Elections brings worries to European stock market

The U.S. is currently nearing its presidential election next week, Nov 8. The campaign period has seen many issues and topics discussed for months now on what possibilities lies ahead the country’s future if one candidate won over the other.

As the Election Day comes closer, the gap between candidates Donald Trump and Hillary Clinton has been on a tight spot. Clinton is currently on the lead on the polls but Trump still catches up on several occasions which only leave a small gap between the two.

Many investors have been worrying should Trump ever win the elections as stocks might not become stable during his administration. Clinton, on the other hand, poses a more promising future for the United States and the global financial market as well.

Now that the US presidential election is closing in, the worries of several investors are increasing. The market has begun to react to the possibility of a Trump victory showing that the S&P 500 lost 13 points in the key support level of 2,097 and was off to 1.3% during the week so far. Bond yields and stock also experienced a decline in the market.

European countries were also affected on the effects of the unpredictable state the US Election brought on the financial market. European stocks fell last Wednesday as Republican bet Trump was announced to be in the lead on the polls and ahead of the Federal Reserve’s rate announcement. If Trump wins, there’s a great chance that it might trigger a massive selloff. The reaction to this could possibly be much more severe for Europe than the results during Brexit last June, which caused the S&P 500 Index to shrink to 5.3% in just a span of two days throughout Europe.

Several analysts predicted that S&P 500 could experience a decline up to 11% to 13% if Trump claims victory over the election.

A lot of financial markets are betting on Democratic representative Clinton to win as they already have an idea as to what her administration could offer. Should Clinton win, investors believe that any possible upside or change will be limited or bearable. Reports say that S&P 500 Index could gain as much as 3% if Clinton should prevail on the upcoming elections but could lose up to 7% if the Republican bet wins.

However, strategist Bruce Bittles said that if Clinton Wins, the country and all the affected markets would experience a repeat just like what happened after Brexit, which means that the market would initially go down but would eventually go back up. Bittles added that if Republican bet wins, the market would witness a sharper down, but then a sharper up will follow as well.

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