Stock markets across the globe surged yesterday, as did the US dollar, putting them on track for their biggest gains in weeks after the FBI stood by its view that no criminal charges were warranted against Hillary Clinton over her e-mail practices.
The news lifted a cloud over the Democrat’s presidential campaign and gave it new momentum before today’s US election, sending the benchmark S&P 500 index up two per cent. The index was on pace to snap a nine-day losing skid, its longest in more than 35 years, and to post its best daily performance in over eight months.
European stocks were up 1.5 per cent and many of the safe-haven assets that had performed strongly last week, when polls showed Republican candidate Donald Trump closing the gap with Clinton, reversed course. Gold and US Treasury bond prices fell.
Investors had been unnerved in recent days by signs of a tightening US presidential race, preferring what is seen as a known quantity in Mrs Clinton, over the political wild card, Mr Trump.
“It is certainly a relief rally for Hillary Clinton – investors worldwide were concerned about the uncertainty surrounding Trump,” said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. “The other, more subtle reason, is if they are ending this email controversy you are not going to have a cloud hanging over her administration, creating roadblocks to getting things done.”
The Dow Jones industrial average rose 341.91 points, or 1.91 per cent, to 18,230.19, the S&P 500 gained 43.7 points, or 2.1 per cent, to 2,128.88 and the Nasdaq Composite added 120.63 points, or 2.39 per cent, to 5,167.00. MSCI’s all-country world index rose 1.5 per cent and was on pace for its best day since June 29. The index had closed at a four-month low on Friday.
Europe’s index of leading 300 shares rose 1.5 per cent, the strongest rally in seven weeks, with a 2.8 per cent rise in financials leading the way.
One of the biggest winners was the Mexican peso, which has been a market proxy for sentiment over the US election and has performed in inverse correlation with Trump’s perceived chances of winning the White House.
The Republican candidate’s proposed policies are considered a negative for Mexico’s economy. The currency rose as much as 2.55 per cent to a one-and-a-half-week high of 18.5457 per dollar.
The dollar jumped 0.77 per cent against a basket of currencies after a 1.3 per cent drop last week.
The shift in sentiment was reflected by the steep fall in anticipated market volatility. The VIX index, also known as Wall Street’s “fear gauge,” was on track to post its biggest one-day fall in over four months and was poised to snap a nine-day stretch of gains.
Gold, which also rose every day last week to a one-month high above $1,300 an ounce, fell 1.9 per cent, its biggest drop since Oct. 4, to $1,279.
Bond prices retreated as risk appetite surged across the board. Benchmark 10-year notes were down 14/32 in price to yield 1.8314 per cent, up from 1.783 per cent late on Friday.