U.S. election fever keeps
stocks, dollar subdued
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[November 08, 2016]
By Marc Jones and Jamie McGeever
LONDON
(Reuters) - Stocks and the dollar were little changed on Tuesday as
global investors trod carefully, readying for the outcome of one of the
most contentious U.S. presidential elections in history.
Trade was largely driven by cautious expectations of a win for Democrat
Hillary Clinton, but some sharp swings in recent days across all asset
classes meant big bets were relatively thin on the ground as Americans
started voting.
Wall Street's S&P 500, Dow Jones, and Nasdaq markets were expected to
open a touch lower having enjoyed their best day since March on Monday,
while the dollar held steady as bonds and gold made ground.[.N][US.][GOL/]
"While the market is broadly pricing in a Clinton victory, we are well
away from the final results," said Ipek Ozkardeskaya, senior market
analyst at London Capital Group.
"It is certainly too early to speculate. The least we can say is that
the risk appetite is quite firm for such a high event-risk day."
At the end of a bruising election campaign, the Reuters/Ipsos States of
the Nation poll gave Clinton a 90 percent chance of defeating Republican
Donald Trump and said she was on track to win 303 Electoral College
votes out of 270 needed, to Trump's 235.
(GRAPHIC: Race to the White House http://tmsnrt.rs/298mTyD)
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Europe's index of leading 300 shares, which posted its biggest gain in
two months on Monday, was flat ahead of U.S. trading. A modest 0.15
percent gain for Britain's FTSE 100 was balanced by 0.1 percent dips in
both Germany and France
MSCI's broadest index of Asia-Pacific shares outside Japan had ended up
0.6 percent overnight though Japan's Nikkei 225 ended flat. MSCI's
global index of world shares was up 0.1 percent.
BREXIT REVISITED?
China's CSI 300 index index added 0.4 percent, with relief over
improving prospects of a Clinton win offsetting bigger-than-expected
declines in both imports and exports and a smaller-than-forecast trade
balance in October.
Clinton is generally seen by investors as offering greater certainty and
stability, and, until stumbling last week after FBI Director James Comey
said the agency was reviewing newly discovered emails, had been seen as
the clear favorite.
While surveys last week showed Republican candidate Donald Trump closing
in on Clinton's lead, at least five major polls on Monday showed her
still ahead.
But investors remained wary, noting Britain's shock vote in June to
leave the European Union had wrongfooted bookmakers and most pollsters.
"A Trump victory would be a clear risk-off event that would trigger
significant reactions and equity markets would take a sharp hit, at
least in the short term," said Andreas Johnson, economist at Swedish
bank SEB.
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People walk through the lobby of the London Stock Exchange in
London, Britain August 25, 2015. REUTERS/Suzanne Plunkett/File photo
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"However, the tightening of the polls indicate that the risk of a very
close result is substantial.".
In currency markets the dollar, which had its best day in a month on
Monday, edged slightly lower. The dollar index, a measure of its value
against a basket of currencies, fell 0.2 percent as the euro rose 0.2
percent to $1.1060.
Having recorded its biggest one-day increase against the yen in almost
four months on Monday, the dollar was flat against the Japanese currency
at 104.40 yen on Tuesday.
It was also flat at 18.5855 versus the Mexican peso, which has ebbed and
flowed in recent weeks in tandem with the perceived chances of a Trump
victory.
The currency is seen as a proxy for bets on the election because Mexico
is considered most vulnerable to Trump's trade policies as 80 percent of
its exports go to the United States.
Most bond yields retreated on Tuesday after rising across the board on
Monday. The benchmark 10-year U.S. Treasury yield fell one basis point
to 1.815 percent.
Crude oil futures were drifting lower too, with U.S. crude down 0.5
percent at $44.66 a barrel and global benchmark Brent down 0.3 percent
at $46.00 having both gained more than 1 percent on Monday.
But safety plays were also in favor as gold climbed 0.1 percent to
$1,285 an ounce, erasing some of its 1.7 percent loss from the previous
session.
(editing by John Stonestreet)
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