Recession and European trading halt?

There could be a global recession following Trump's US Presidential election, according to institutional asset manager, Principal Global Investors.

Principal Global Investors' chief executive, Jim McCaughan, said if Trump fulfilled his promise on tariffs, which could stop trade in and out of the US, it would slow economic growth and that could cause a recession.

However, there was a much higher probability that economies adopted an anti-trade populist view following elections in France, Germany and Netherlands next year, he said.

"And of course the Italian constitutional referendum could go against the Renzi Government. If you add that all up, there's a chance that this anti-trade movement becomes much more global and that would mean that you'd see declining production, declining economic activity and ultimately more unemployment."

"That is something that is legitimate to fear," he said.

In addition to Europe, emerging markets were particularly at risk from a decline in trade, he said.

Notwithstanding that, post the US election, 10-year bond yields remained attractive, worldwide commodity demand would continue to rise, and US markets would be favoured over foreign markets, McCaughan said.