Forex Rates
An employee of a foreign exchange trading company works near monitors displaying U.S. Democratic presidential nominee Hillary Clinton and U.S. Republican presidential nominee Donald Trump on TV news, the Japanese yen's exchange rate against the U.S. dollar (L top) and Japan's Nikkei average in Tokyo, Japan, November 9, 2016. Reuters/Toru Hanai

The surprise strong showing of Republican candidate Donald Trump in the ongoing US presidential elections is rattling global markets, causing drops in major stock exchanges. A win by Trump appears to be not only an American nightmare but would cause global stocks to crash, warns a huge hedge fund.

Early results of the voting indicated it is a very tight race, tighter than what the markets expected. Latest results shows Trump has 38.98 million votes or 49.2 percent and 197 of the electoral votes. Hillary Clinton has 131 electoral votes or 36.92 million or 46.5 percent of electoral votes, according to the Sydney Morning Herald.

With Trump leading the votes, the Dow Jones Industrial Average futures declined by more than 400 points, down 2 percent. Standard & Poor’s 500 stock index plummeted 63 points, while NASDAQ logged a drop by more than 100 points, The Washington Post reports.

In Asia, Japan’s Nikkei index also shed 2 percent, or 382 points. Hong Kong’s Hang Seng index went down by more than 600 points, or over 2.5 percent. Bloomberg reports that the Mexican peso dipped to an eight-year low.

Bridgewater Associates, a large hedge fund, in a note to client on Tuesday, forecasts the Dow Jones Industrial Average could lost almost 2,000 points if Clinton loses to Trump. It could potentially break the 777-point declined logged on Oct 29, 2008 when panic surrounded the financial crisis. It would be more than twice the biggest one-day drop in stock market history, Fortune notes.

US Electoral Map
A U.S. Democrat living in Mexico updates the electoral map as he follows his country’s presidential election in Mexico City, Mexico, November 8, 2016. Reuters/Edgard Garrido

In the event it happens, almost US$1.9 trillion (A$2.49 trillion) in value could be wiped out from stock market portfolios in the US. Outside the US, the European and Chinese stock markets could go down by about 11 percent, Bridgewater says.

However, if Clinton wins, Bridgewater – which stresses it is not taking a position in the US presidential election – forecasts a 2.3 percent increase in the stock market, or almost 400 points. Despite Trump’s plan to cut taxes which should be good for the bourses, the expected difficulty in predicting policies under a Trump presidency would explain market behaviour since investors do not like uncertainty.

Bridgewater warns working Americans to kiss their 401 (k) goodbye if Trump triumphs.

Chris Weston, chief markets strategist at IG Markets in Australia, describes the unexpected lead of Trump as “a little bit crazy.” He blames the jittery investment climate to markets unprepared for a Trump victory. “Pollsters need to go away and have a holiday – every single one of them should be fired.