Global markets rattled as new poll shows Donald Trump in the lead

WASHINGTON, U.S. - Global markets are on shaky ground after a Washington Post-ABC News tracking poll released on Tuesday showed Donald Trump with a one-point lead over Hillary Clinton ...


• Clinton camp rejects findings of ABC/Post poll

• FTSE 100 hits lowest level since September 30

• Analysts warn of "black swan" event

WASHINGTON, U.S. - Global markets are on shaky ground after a Washington Post-ABC News tracking poll released on Tuesday showed Donald Trump with a one-point lead over Hillary Clinton nationally.

This is the first time the Republican presidential nominee has moved ahead of the former First Lady in this particular poll since May.

The poll, which gave Trump 46 percent to Clinton’s 45 percent nationally, comes close on the heels of a letter by FBI Director James Comey to U.S. Congress stating the bureau was reviving its investigation into Hillary Clinton's private email server.

Hillary Clinton’s campaign team has rejected the findings of the poll.

The tremors were felt far beyond the United States, where Wall Street closed sharply down on Tuesday, as Asian stocks hit a seven-week low on Wednesday, while European bourses followed Wall Street's lead overnight and slid to a four-month low.

The FTSE 100, Britain’s benchmark share index, shed 40 point or 0.6 percent at the open on Wednesday – its lowest level since September 30.

The picture was similar across Europe with Germany’s stock index DAX losing 0.8 percent while France’s CAC, the most widely used indicator of the Paris market, dropped by 0.7 percent.

Earlier, stocks across Asia Pacific also saw a broad selloff on Wednesday with the Nikkei in Japan down by 1.8 percent at 4 am GMT. 

There were also steep falls in Australia where the ASX/S&P 200 benchmark index was down almost 1.5 percent, with falls of 1.3 percent in South Korea and Hong Kong, respectively.

In India too, the Sensex and Nifty closed over 1 percent down, following the weak global trend. 

And in the Philippines, the local stock barometer slid to the 7,200 mark on Wednesday, hitting its lowest level in six months.

Rattled by the possibility of a Trump victory, investors put their money in safe-haven assets such as gold, the Swiss franc and the Japanese yen, which rose today, while the dollar lost ground against the yen and the euro.

Investor anxiety has deepened in recent sessions over a possible Trump victory given the uncertainty on the Republican candidate's stance on key issues including foreign policy, trade relations and immigrants, while Clinton is viewed as a candidate of the status quo.

A Clinton win is generally seen by analysts as likely to be a positive for the dollar and the stock market. 

The Vix index - a measure of volatility known as the “fear gauge” - rose to its highest level since the United Kingdom voted to leave the European Union, indicating the mood of the markets.

Heavy selling also knocked the Mexican peso, seen as the most vulnerable to a Trump presidency due to his pledge to build a wall along the U.S. border with its neighbour to prevent entry of illegal immigrants and other proposals, including slapping tariffs on Mexican imports.

The peso, which posted its biggest fall in two months on Tuesday, extended losses to 19.380 to the dollar, its lowest level since early October.

But it's not just this election which has impacted world markets to such an extent. 

Historically, whenever Americans have voted for a new president in recent decades, markets have shown a tendency to get rattled.

The tense situation in markets came as the Federal Reserve holds its two-day policy meeting, with its statement due later on Wednesday. 

While traders do not expect the central bank to raise interest rates just a week ahead of the presidential election, they are looking for signs that the Fed is set to hike rates in December.

Oil prices also tumbled to one-month lows as a trade group’s report of larger-than-expected U.S. crude inventory added to concerns about oversupply from growing doubts over whether oil producing countries can agree on an output cut later this month.

Citi analysts have warned that the revival of the FBI probe against Hillary could shock global stock markets worse than any "black swan."

A "black swan" event is a metaphor used by the investment community to describe an event that comes as a surprise, such as the crash of the U.S. housing market in 2008. 

There are fears that depending on the outcome of the November 8 election, the U.S. stock market could crash and plunge the world into recession, especially with growth and employment globally looking fragile.

 

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