Wednesday 13 December 2017

Money markets hit by nerves as race tightened

Donal O'Donovan Business Editor

US stock futures and the Mexican peso slipped sharply early this morning as results from the US seemed to point to a Donald Trump win.

The dollar slipped in the early hours in Asian trading. "It's quite scary," said Nader Naeimi, the Sydney-based head of dynamic markets at AMP Capital Investors.

"The slightest move towards Trump moved the market," he added.

With the shadow of June's Brexit vote hanging over them, the tone in the markets remained tentative as the results rolled in slowly from the US, but Trump gains saw markets weaken.

World stock markets inched nervously higher after America polls closed, with investors betting that Hillary Clinton would see off Donald Trump's protectionist challenge.

In a reversal of the traditional US political divide, the Democratic nominee is seen as the more conservative and predictable candidate.

Despite his wealth and business background, Republican contender Donald Trump is seen as unpredictable, with some extreme positions on foreign policy, trade and immigration.

"A Trump victory would trigger massive uncertainty that would likely undermine risk assets at least initially, which in turn could preclude a Fed rate hike this year," warned Michelle Girard, chief US economist at RBS.

Banks had forecast falls of up to 5pc in the dollar's against Japan's yen if Donald Trump comes out ahead, and a smaller boost if Hillary Clinton prevails.

US stocks were up for a second straight session yesterday and shares remained positive overnight. But the dollar slipped against the safe haven yen and against the euro on Asian markets, which were open and active in the early hours of Wednesday.

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 yesterday but fell more than 7pc in the early hours of this morning.

Earlier, shares in US health insurers Aetna and Anthem each jumped, 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.

The memory of June's Brexit vote is still raw, which the markets got spectacularly wrong by buying the pound on early reports the British referendum to stay in the EU would be passed.

Irish Independent

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