The US elections are likely to overshadow every other event in the news this week, and regardless of whether Donald Trump or Hillary Clinton wins, the market is likely to be volatile in the coming days.
In the event Clinton wins, a relief rally is expected. Markets and yields will rise and the Swedish krona will probably strengthen. However, if Donald Trump were to win, markets could plunge by 8-10% forecasts SEB. Short-term bond yields are likely to fall sharply, particularly in the classical safe haven markets such as the United States, Japan and Switzerland. The krona will weaken to well over SKr 9 against the US dollar and to over SKr 10 against the euro.
Just how the election will impact on the financial markets in the longer term is unclear, but geopolitical insecurity will increase with Donald Trump as president, which would suggest lower yields and markets. On the other hand, the USA’s budget deficit is likely to increase with Trump at the helm, which would speak for higher yields and markets, mulls Dagens Industri.
With Hillary Clinton in charge there is likely to be less drama; most investors believe that the u-turns on free trade and the financial and pharmaceutical industries have more to do with election rhetoric than anything else.
On Tuesday night/Wednesday morning we will know. Fasten your seatbelts, advises the business daily.