As we enter into the final stretch of the U.S. presidential election campaign, traders across the globe are positioning themselves for the outcome of the Nov. 8 vote.
If you are a U.S. citizen, your opportunities to bet directly on the election are limited. After all, aside from venues like the Iowa Electronic Markets where your bet size is limited to $500, betting on the outcome of the U.S. elections by U.S. citizens is illegal.
Still, financial markets offer plenty of other indirect opportunities to bet on the U.S. election result.
Let‚??s look at the current state of play.
To start, it is abundantly clear that investors would view the election of Donald Trump as U.S. president negatively — certainly over the short term.
Last Friday‚??s sharp sell-off in the U.S. stock market, following news that FBI Director James Comey had sent a letter to Congress saying investigators had reopened an investigation into Hillary Clinton‚??s emails, provided a hint as to what you can expect if Trump pulls off a victory.
After the news broke, the Dow Jones Industrial Average promptly plummeted from a peak of 18,255 to a trough of 18,097.
The VIX —¬†or the ‚??Fear Index‚?Ě —¬†also spiked to a one-month high.
That most investors are fearful about the uncertainty following a Trump victory is nothing new. Economics research firm Macroeconomic Advisers has found that there has been a consistent inverse correlation between the probability that Trump wins the election and a fall in stock prices throughout this entire election cycle.
The conventional wisdom remains that Hillary Clinton will emerge victorious in the U.S. presidential election next Tuesday.
Still, with the polls trending toward Trump, there are plenty of opportunities for speculators to bet on ‚??The Donald.‚??
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