Business

Citi: Trump election could lead to 5 percent drop in S&P

by Sylvan Lane - 11/04/16 3:18 PM ET

Donald Trump’s election could trigger a 5 percent dip in the Standard & Poor’s 500 index and dismal growth, analysts at Citibank warn.

Stocks have dipped this week as Hillary Clinton’s lead over Donald Trump shrank. The downturn reflects investor’s fears over their longstanding bets on Clinton victory and uncertainty that would be created by a Trump presidency.

{mosads}While the Democratic nominee has maintained her overall lead, and Friday polls showed strong buffers for her in several swing states, Republicans coalescing behind Trump and new FBI action related to Clinton’s private email server have spooked investors.

Citi analysts projected an immediate sell-off of up to 5 percent on the index tracking the biggest traded United States corporations if Trump wins the Tuesday election, according to CNBC. The analysts also warned that a Trump election could trigger slowed growth or a recession.

“A Trump win risks slower growth or recession if trade is restricted and fiscal expansion plans curtailed. Uncertainty alone could hit the economy. Global growth will also be impacted if uncertainty rises, U.S. growth is hit and U.S. financial conditions tighten,” said the analysts.

On the flip side, Citi argued a Clinton victory could leave energy stocks worse off because a Trump administration would likely relax Obama administration environmental regulations.

“A Clinton victory might pressure the oil and gas industry via more restrictions on drilling but that would also support oil prices and help the Energy sector,” wrote the analysts.

Low oil prices triggered by an unexpected excess in crude reserves have also weighed down energy stocks.

Biotechnology stocks could also take a hit, because Clinton has promised to crack down on high pharmaceutical prices.

Tags Donald Trump Hillary Clinton