Trump victory would trigger ‘violent’ market reaction

A Donald Trump victory in the US presidential election on Tuesday would trigger a "quick and violent" market reaction, as investors still don't see him prevailing, according to a senior analyst in the world's largest political risk consultancy.

Financial markets wobbled globally last week as Democratic nominee Hillary Clinton lost much of her polling lead against Mr Trump, after the FBI re-opened a probe into her use of a private email server while she was secretary of state.

However, Willis Sparks, director of global macro at Eurasia Group, which advises major investment banks, investment firms and government agencies globally, said his firm believes it is "very unlikely" that Trump will take control of the Oval Office.

"The idea that this is a close race is overrated," Mr Sparks told The Irish Times ahead of speaking at PricewaterhouseCooper's annual business forum on Tuesday. If Trump did succeed, it would lead to "sustained market turmoil, because it would take some time for the markets to feel like they had a handle of what is possible under a Trump administration".

The New York businessman and former reality TV star has built a campaign around pledges such as building a wall on the US-Mexican border, slapping 45 per cent tariffs on Chinese imports and a 35 per cent levy on Mexican goods, and renegotiating a North American trade agreement.

“There’s a lot of people arguing in favour of Trump on the basis that he doesn’t mean all that he says, but what parts did he mean and what parts did he not mean?” said Mr Sparks. “It’s possible even Donald Trump doesn’t know the answer.”

If the Republican candidate is victorious, there will probably be a period of uncertainty over who will be appointed to key government positions, such as secretaries of state and the treasury, according to Mr Sparks.

“So much of the policy establishment have denounced Trump and he’s denounced them back,” he said.

European elections

Meanwhile, Eurasia believes that national elections in France and Germany next year will delay substantive negotiations between the EU and the UK on the shape of a post-Brexit deal.

Elsewhere, if Italian prime minister Matteo Renzi fails to secure voter support for a constitutional referendum next month, aimed at rebooting one of Europe's weakest economies by making it more governable, it may feed "populist anti-EU" sentiment elsewhere on the continent, Mr Sparks said.

Opinion polls project that the Italian ‘No’ campaign has a narrow lead. While there have been reports that the referendum, slated for December 4th, may be delayed as a result of a recent series of central Italian earthquakes, the government has so far ruled that out.