Political risk just got huge
As if there wasn’t enough political risk to worry about for capital markets — June alone has the UK’s referendum on EU membership and a rerun of last year’s Spanish general election — then all those concerns have just been Trumped.
The joke that was Donald Trump’s candidacy for US president has now spawned into a real threat after the populist opportunist — or dangerous ideologue, depending on whether you believe his sincerity — is almost certain to be the 2016 Republican Party candidate.
This is a man who has failed to denounce violence against protesters by his supporters, who thinks peace can be brought to the Middle East by bombing it into oblivion and who has even made lewd remarks about his own daughter.
Worse, none of that has dented his popularity one iota. Now the contest will turn serious, what perils do markets face once it officially becomes a two-horse race to the White House?
Hillary Clinton, the likely Democratic Party candidate, has been consistently ahead of Trump in the polls, and had a 54% to 41% lead at the time of writing, according to the latest CNN/ORC figures.
But the candidates have been much closer at times over the last few months, and even her biggest supporters cannot deny that Clinton is a divisive figure among the American populace. If the gap narrows again, get ready for market volatility.
Trump said before entering the race that the announcement revealing his candidacy would be “huge”. His impact on the capital markets over the next few months could be just as hefty.