US mar­kets not fully buy­ing a Clin­ton win

Kuwait Times - - BUSINESS -

NEW YORK:

As the US pres­i­den­tial elec­tion moves into the home stretch, fi­nan­cial mar­kets are not fully in­vested in polls that show a win for Hil­lary Clin­ton. Even though polls show the Demo­cratic can­di­date with a strong lead over Repub­li­can Don­ald Trump, an­a­lysts say in­vestors are wait­ing un­til af­ter Novem­ber 8 to lay their money on the table. “I don’t think it’s fully 100 per­cent Clin­ton is in,” said JJ Ki­na­han, chief mar­ket strate­gist at TD Amer­i­trade, who sees a pull­back in risk-ori­ented in­vest­ments as a sign of in­vestor cau­tion.

“Usu­ally peo­ple are look­ing to take on ex­tra risk for re­ward,” he said. “I think this is one case where peo­ple are par­ing back on their risk.” Wall Street is thought to gen­er­ally fa­vor Clin­ton over Trump for pres­i­dent, and eq­uity mar­kets have hov­ered at his­tor­i­cally high lev­els since July, with the S&P 500 less than three per­cent below its all-time peak.

Clin­ton is con­sid­ered the more mar­ket-friendly out­come, ex­pected to main­tain the poli­cies of out­go­ing Pres­i­dent Barack Obama, while the mar­ket views Trump as a great un­known, both be­cause of his pen­chant for con­tro­versy and his lack of a record in public of­fice. Trump has at­tacked trade part­ners China and Mex­ico and ac­cused Fed­eral Re­serve Chair Janet Yellen of be­ing a po­lit­i­cal tool of the Demo­cratic party. In­vestors are also un­set­tled by Trump’s seem­ing em­brace of Rus­sian Pres­i­dent Vladimir Putin, a sign he may take for­eign pol­icy in rad­i­cal new di­rec­tions. Signs of ner­vous­ness have been seen in cer­tain trades, an­a­lysts say, like the Mex­i­can peso. Trump’s pledge of im­mi­gra­tion con­trols and trade re­stric­tions with Mex­ico have raised wor­ries over its econ­omy. The peso sank against the dol­lar as Trump’s cam­paign added mo­men­tum, but then re­bounded on Clin­ton’s gains fol­low­ing the first pres­i­den­tial de­bate on Sept 26. But it re­mains down about 9 per­cent since Trump se­cured his party’s nom­i­na­tion in May. On the other hand, an­other gauge of mar­ket sen­ti­ment has been the biotech­nol­ogy sec­tor, which is seen as vul­ner­a­ble in a Clin­ton pres­i­dency given the Demo­crat’s vow to ad­dress run­away drug prices. The Nas­daq biotech­nol­ogy in­dex has fallen about nine per­cent over the last month. Some an­a­lysts say the mar­kets have al­ready as­sumed a Clin­ton vic­tory. “To me, the mar­kets clearly want a Clin­ton win and they have priced that in,” said Nathan Thooft, se­nior man­ag­ing direc­tor at Man­ulife As­set Man­age­ment. “That’s what they pre­dict, and that’s what they want. If that doesn’t hap­pen, I feel there’s a great level of un­cer­tainty and pos­si­ble down­side to the mar­kets.”

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