Political tremors send
global stocks to lowest since July
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[November 04, 2016]
By Patrick Graham
LONDON
(Reuters) - Global share prices retreated to their lowest levels since
early July on Friday after two weeks of losses driven by uncertainty
about the outcome of the U.S. presidential election and, latterly,
Britain's path out of the European Union.
A London High Court ruling on Thursday dealt a big blow to Prime
Minister Theresa May's plans to launch formal Brexit talks next March,
prompting speculation of an early national election and sending sterling
spinning higher.
The pound was up another 0.1 percent in early trade on Friday. London's
share indices were down across the board, with the blue chip FTSE100
Europe's worst performer with a 1.4 percent loss.
The dollar has meanwhile been hammered by a surge in opinion polls in
the past week for U.S. Republican presidential candidate Donald Trump.
Investors believe this may prevent the U.S. Federal Reserve from raising
interest rates next month.
Broader jitters about the shape of global trade and growth should a
Trump presidency ensue have also contributed to sending shares down
across the globe, and the major markets in Europe and Asia were all
again in retreat on Friday.
MSCI's global share index slipped just under half a percent to its
lowest since July 11. It is down almost 5 percent over the past two
weeks.
"With only a few days left until Americans go to the polls many traders
are continuing to reduce their risk exposure," said Markus Huber, a
trader with brokers City of London Markets.
Stock markets in Germany, Spain, France and Italy all fell around 1
percent. U.S. stock markets were set to open flat, according to initial
futures pricing.
MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.4
percent after brushing its lowest levels since early August. It was on
course for a loss of 1.7 percent for the week.
SWING STATES
The latest Reuters/Ipsos polling showed Democrat Hillary Clinton, seen
as the status quo candidate by markets, maintaining a narrow lead over
Trump.
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But several swing states that the Republican challenger must win have
shifted from favoring Clinton to toss-ups, offering Trump a possible
route to victory.
"Even if opinion polls show that Clinton is maintaining a lead, anything
can happen at the last minute, something the Brexit (referendum) outcome
taught us," said Norihiro Fujito, senior investment strategist at
Mitsubishi UFJ Morgan Stanley Securities.
In his campaign Trump, a political novice, has vowed to clamp down on
immigration, rethink trade relations and slap high tariffs on imported
goods.
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U.S. stocks sagged on Thursday, with the S&P 500 suffering its eighth
day of losses, its longest streak since the 2008 financial crisis. A
slump in Facebook shares also sapped investor confidence.
The dollar clawed back some lost ground against the yen in Europe on
Friday, rising 0.2 percent to 103.19, but was still on course for a 1.5
percent loss for the week.
The euro edged down 0.1 percent to $1.1097, up about 1 percent for the
week.
Attention will move at least briefly to the monthly U.S. nonfarm
payrolls report later on Friday, the addition of 175,000 jobs by
employers in October expected to lay the economic ground for a Fed rate
rise next month.
Oil prices were flat after falling more than 1 percent on Thursday as
investors reacted to a record weekly surge in U.S. crude inventories and
remained skeptical that OPEC would actually implement its planned curbs
on output.
U.S. crude and Brent crude traded at $44.66 $46.26 per barrel
respectively.
(Additional reporting by Atul Prakash; editing by Gareth Jones and John
Stonestreet)
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