Advice for Investors

World Markets Bracing For A Trump Win

  • Why it matters

    Why it matters

    Investors and central bankers around the globe fear that a Trump presidency may cause turmoil in markets weakend by years of expansionary monetary policy.

  • Facts


    • A Trump presidency is looking more probable according to recent voter polls.
    • Global markets fear a Trump presidency could bring trade tariffs and protectionist policies.
    • The U.S. is still the world’s most important economy and the dollar still the global reserve currency. A shock to the U.S. system would be felt around the world.
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Trading On The Floor Of The NYSE While U.S. Stocks Rise On Deal Activity As Election Looms
Traders on the floor of the New York Stock Exchange this week. Markets are starting to brace for a Trump victory. Source: Bloomberg

For a central banker, Augustin Carstens has a surprising penchant for metaphors. The Mexican Central Bank chief recently called Donald Trump, the Republican presidential candidate, a “cyclone.”

A cyclone that could sweep through the economy of his country, that is. But Carstens not only has a sense for rhetoric, he’s also a prudent person. And so he has taken precautions and laid out a contingency plan for the event that Mr. Trump is actually elected president of the United States.

The central bank head is already feeling the first gusts of wind. Since opinion polls have started giving Mr. Trump a realistic chance of winning, Mexican financial markets have been going crazy. A Trump presidency would be nothing less than a disaster for a country that ships nearly 80 percent of its exports to the United States. Mr. Trump doesn’t only want to build a wall up to 25 meters high along the Mexican border. He wants to cancel the North American free trade agreement NAFTA and impose tariffs on imports.

Fears of a Trump win are rampant across the global financial markets. “Should Trump actually win, a selloff is to be expected in global financial markets,” said Paul Richards, president of Medley Global Advisors, an information service for institutional investors.

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