Martin Flanagan: Markets hold breath as US goes to polls

Republican presidential nominee Donald Trump in Raleigh, North Carolina, on the final day of campaigning. Picture: AFP/Getty Images
Republican presidential nominee Donald Trump in Raleigh, North Carolina, on the final day of campaigning. Picture: AFP/Getty Images
0
Have your say

There are a minority who believe any victory for Donald Trump in today’s US presidential election may provide some opportunities for counter-intuitive investors.

It is the old financial market maxim of buying when there is blood in streets (hopefully only metaphorically speaking). It is true that haven assets such as gold, property and the Swiss franc may get a temporary shot in the arm if Trump – still the outsider – wins the most bitter American presidential election in a very long time.

It is also not unheard of, though admittedly more esoteric, for the very wealthy to invest in the likes of fine wine, paintings and vintage cars when the rest of us think it might be time for the hill forts and tinned less perishable food.

But the shock to a large part of the western psyche of a Mexico wall‑building Trump triumph may even undermine the speed of that traditional dash to asset havens in volatile times.

It is being taken as a given that any Trump victory – still slightly unlikely, but remember Brexit – would spark a selloff in equities. But after the initial reaction, I would then expect shares to fluctuate sharply for a lengthy period, dead cat bounces and all, as a major new wild-card geo-political factor enters the equation.

From a potentially transmogrified America to austerity Britain to the debt-raddled southern EU, government bonds won’t offer much solace, either. The dollar is also likely to tank short-term if Hillary Clinton finishes second.

In short, if after today it is the most right-wing Republican presidency in living memory I expect a sharp correction for markets, mitigated by kneejerk buying-on-weakness investors, settling down to a prolonged period of being unsettled. We are in uncharted waters. Let’s hope the rudder holds.

Digital derailment

The only surprise about another UK bank having an online “outage” for its customers (this time Tesco Bank is that the shock value has diminished so much. NatWest, HSBC, Barclays, Lloyds TSB and others have all had problems. It still causes customers who cannot access their money online or pay bills exasperation, but the problem has moved from spasmodic to endemic.

Consumers derailed digitally. Again.

Click here to ‘Like’ The Scotsman Business on Facebook