Friday 2 December 2016

Asia markets on tenterhooks as early US presidential results roll in

Published 09/11/2016 | 01:17

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Asian markets were on tenterhooks this morning as early results came in from America showing wins for both Donald Trump and Hillary Clinton.

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As the polls closed, US stocks rose for a second straight session on the back of data suggesting the profile of early voters, including a significant lift in turnout by Latino voters, point to a Clinton win.

But investors in Asia were on edge as results started to trickle in from the United States showing gains for both sides, even though there were no surprises. The dollar also dropped back against the Yen.

Investors are betting it will ultimately end in a win for Mrs Clinton, widely considered a safe pair of hands at home and on the world stage.

In a reversal of the traditional US political divide this year the Democratic candidate is seen by many investors in the US and beyond as the more conservative, more pro-trade and more predictable candidate in the race.

Despite his own wealth and business background, Republican contender Donald Trump is seen as by far the looser cannon, with unpredictable and in some cases extreme positions on foreign policy, trade and immigration.

In a tight race markets have dropped when polls show Trump moving ahead and rallied in tandem with Clinton.

Yesterday, as polls appeared to favour Hillary Clinton, the MSCI All Country index of world shares recouped all of this month’s previous decline, in America the S&P 500 Index was set for its biggest two day gain since June and the price of so called safe haven investments, including US government bond and the Swiss franc dropped.

Mexico’s peso, which has gained and weakened throughout the campaign in an inverse relationship to Donald Trump’s poll numbers, strengthened against the dollar for a fourth day on Tuesday.

Shares in US health insurers Aetna and Anthem each jumped more than 2pc yesterday, rising in anticipation of a Clinton win, because they are set to gain from an extension of affordable health care under a new Democratic presidency.

Wall Street’s so called index of fear, the VIX index that allows investors to insure themselves against global volatility, dipped in another sign of relative calm.

Memories of the outcome of last June’s Brexit vote, which the markets got spectacularly wrong despite the closeness of the polls, probably tempered any big movers higher in the stock markets, however. In June investors responding to early reports that the British referendum to stay in the European Union would be passed first pushed sterling higher, before seeing the currency dramatically crash in overnight markets in Asia as the true result became clearer.

Exit polls in some US states in particular, including Pennsylvania, Michigan, Virginia and Florida, are understood to be in traders’ sights as a gauge of the wider outcome.

Because of the time distances Asian markets were always likely to be the cockpit of any overnight volatility after polls closed but traders in Irish banks, in particular on the foreign exchange desks were assigned to work from the early hours of this morning. 

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