Emerging markets rally as Clinton show revives mood

Emerging-market stocks and currencies rose for the first time in three days as investors reckoned Hillary Clinton won the first of three American presidential debate, giving a reprieve from concern a Donald Trump victory in November elections may plunge financial markets into turmoil.

Mexico’s peso rebounded from a record low as Trump, who has pledged to renegotiate regional trade deals and step up immigration controls, was put on the defensive by the Democratic nominee in a televised face-off.

South Korea’s won and South Africa’s rand reversed declines. Turkish bonds rose after a sell-off spurred by the country’s downgrade by Moody’s Investors Service.

Clinton and Trump clashed over trade, economy, race and foreign policy in an event that revealed their starkly different personalities and visions of the future. Citigroup Inc. has said an election victory for the Republican candidate could sink equities and may also spur volatility in gold and currency markets. The resumption of gains yesterday puts emerging-market stocks on course for the best quarter since March 2012 and currencies on track for a third quarterly rally.

“The debate supported the markets in bouncing back from yesterday’s sell-off,” said William Jackson, an emerging-market economist at Capital Economics in London. “There is a good chance that volatility will continue until the elections. Given that valuations are not overly stretched and the macroeconomic story is improving, there may be room for further gains.”