Monday, 7 November 2016

FBI clears Clinton but US election still poses risks for stock market

The FBI said on Sunday it stood by its earlier finding that no criminal charges were warranted against Democrat Hillary Clinton for using a private email server for government work.

This should allow Clinton to coast towards victory in the presidential election on Tuesday. The latest Reuters/Ipsos poll shows Clinton with a 5 percentage point lead over her rival, Republican candidate Donald Trump, while the Reuters/Ipsos States of the Nation project estimates that Clinton has a 90 percent chance of winning the election.

Still, with the uncertainty surrounding the US elections coupled with the weak global economic climate, former IMF chief economist Simon Johnson thinks that the stock market is at risk of a crash.

[G]rowth and employment around the world look fragile. A big adverse surprise – like the election of Donald Trump in the US – would likely cause the stock market to crash and plunge the world into recession.

Meanwhile, William Watts at MarketWatch thinks there is a risk for stocks even if Hillary Clinton wins.

Investors may have qualms about the prospect of a Donald Trump presidency, but the biggest near-term threat to stocks is posed by the outside possibility that neither he nor Hillary Clinton emerges a clear winner on Tuesday.

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