Analysts say S&P 500 is waiting for sale, if Donald Trump wins the election, whereas in case of Hillary Clinton’s victory the current increase will remain.
There are fears that traders may misinterpret the potential outcome of the elections, as happened in case with the British referendum when they did not expect that the country would vote for the exit from the EU. S&P 500 fell by 5% after the vote.
On Friday, S&P 500 closed at 2085.18, registering a 9-day decline, the first time since 1980, as the gap between Clinton and Trump began to shorten.
Below we consider the forecasts of the leading banks on the election outcome:
If Clinton wins, S&P 500 recovers by 3% to 2.150, while shares of European companies and emerging markets will add 3-4%, said Mislav Matejka, bank analyst.
If Trump wins, the markets continue falling, he said.
“We are confident that Clinton wins, while the Democratic majority in the Senate is quite possible”, – said Alec Phillips, an economist of the bank, adding that the election results will be known not earlier than November 9th.
S&P 500 could lose 11-13%, in the case of Trump’s victory, said Keith Parker, the bank’s strategic expert, while Clinton’s victory will bring growth to the index at a rate of 2-3%.
“Trump’s victory threatens the market correction in the amount of about 5%, after which investors are going to reassess the situation”, – says Tobias Levkovich, chief strategist of the bank.
Regardless of who wins, the stock of the companies producing secondary products, energy resources, as well as financial and technology companies will show confident dynamics. Real estate and commodities will go ahead, in the case of Trump’s victory.
However, the weakening of the market will worsen if no candidate wins the required 270 electoral votes in case if Clinton wins, and Trump will not accept the defeat.
S&P 500 fell more than 5% from the date of election on 7th November 2000 to 12th of December, when there was a ruling of the Supreme Court in favor of George W. Bush.
“The worst-case scenario is if on Tuesday the result of the elections is still unclear”, – said Brian Belski, investment strategist at BMO Capital Markets.
“We expect that the disunity in the government will limit the potential changes in taxation and spending on infrastructure”, – concludes Michael Zezas, strategist at Morgan Stanley.