Global stocks rise as Brexit wor­ries ebb

Kuwait Times - - BUSINESS -

World stocks and the dol­lar were lit­tle changed yes­ter­day as global in­vestors trod care­fully, readying for the out­come of one of the most con­tentious US 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. “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.

Europe’s in­dex of lead­ing 300 shares, which posted its big­gest gain in two months on Mon­day, was flat ahead of US 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.

China’s CSI 300 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. “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 one­day in­crease against the yen in al­most four months on Mon­day, the dol­lar was flat against the Ja­panese cur­rency at 104.40 yen yes­ter­day.

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 yes­ter­day af­ter ris­ing across the board on Mon­day. The bench­mark 10-year US Trea­sury yield fell one ba­sis point to 1.815 per­cent. Crude oil fu­tures were drift­ing lower too, with US 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.

Most Asian mar­kets ex­tended gains yes­ter­day hopes Hil­lary Clin­ton will beat Don­ald Trump to win yes­ter­day’s pres­i­den­tial elec­tion but traders are cau­tious with many opin­ion polls say­ing the race is too close to call. Global eq­ui­ties and risk as­sets surged Mon­day af­ter the FBI said it would not pur­sue crim­i­nal charges against Clin­ton over her use of a pri­vate email server while sec­re­tary of state.

The rally came af­ter a week of tur­moil caused by the bureau’s an­nounce­ment on October 28 it was look­ing into the is­sue, de­spite hav­ing cleared her once al­ready in July. Clin­ton is con­sid­ered by many in­vestors to be a safer bet than Trump, who is seen as a loose can­non with poli­cies many fear could wreck the world’s top econ­omy.

Hong Kong rose 0.3 per­cent in the af­ter­noon, Syd­ney ended up 0.1 per­cent, Seoul gained 0.3 per­cent and Sin­ga­pore was 0.3 per­cent higher. Wellington, Taipei and Manila also posted healthy ad­vances but Tokyo closed marginally lower. Shang­hai added 0.5 per­cent as in­vestors brushed off news that Chinese ex­ports fell for a sev­enth con­sec­u­tive month in October as weak global de­mand put an­other dent in the world’s num­ber two econ­omy. “We’ve been swung this way and that over who may win, but ex­pec­ta­tions of a Clin­ton vic­tory are firm­ing,” said Toshi­hiko Mat­suno, a se­nior strate­gist at SMBC Friend Se­cu­ri­ties Co.

“Since it’s eas­ier to pre­dict pol­icy with her, there’s more of a sense of security in the mar­ket. Stocks may price in 70 to 80 per­cent (chance) of a Clin­ton vic­tory to­day,” he told Bloomberg News.

In Asia, the dol­lar bought 18.5833 pe­sos from 18.6463 pe­sos in New York and well down from the lev­els ap­proach­ing 20 pe­sos touched last week. The up­beat mood also lifted high-yield­ing, or riskier, cur­ren­cies in Asia, with Aus­tralia’s dol­lar, the South Korean won, In­done­sian ru­piah, Thai baht and

Malaysian ring­git all up against the green­back. How­ever, there re­mains unease with Trump hav­ing ral­lied from a dou­ble-digit deficit in some polls to within strik­ing dis­tance of Clin­ton, while an­a­lysts pointed to June’s shock EU exit vote in Bri­tain. — Agen­cies

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