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| Republican Presidential candidate, Donald Trump |
Asian equities tumbled Wednesday,
extending a global sell-off, and the Mexican peso fell after a poll
showed Donald Trump overtaking market favourite Hillary Clinton in the
race for the White House.
With Clinton until last week comfortably
ahead, traders were upbeat about her chances of winning on November 8
but news Friday that the FBI were again looking at her emails has raised
the prospect of Trump becoming president.
Trump is viewed as a wildcard, in part
because of his harsh criticism of Federal Reserve chief Janet Yellen and
international trade pacts.
“Since the FBI reopened its case into
Hillary Clinton’s emails last Friday, her substantial lead in the polls
has been decimated and some now even show Trump in the lead,” Craig
Erlam, a senior market analyst at OANDA, said in a note.
“It’s been clear for some time now that
markets would much prefer the stability that a Clinton victory would
bring for the US economy and the reaction over the last 24 hours or so
since the polls started to change so dramatically just confirms this.
Trump risk is well and truly being priced in again.”
The news battered markets on Wall Street
and in Europe, while the VIX volatility index, which is seen as a
measure of the US market’s fears, was sitting near levels last seen
after Britain voted in June to leave the EU.
Those losses filtered through to Asia,
where Tokyo closed 1.8 percent lower, while Hong Kong dived 1.5 percent
and Shanghai ended down 0.6 percent.
Sydney and Seoul each sank more than one percent and there were also sharp losses in Wellington, Manila and Taipei.
– US rate uncertainty –
In early European trade London fell 0.6 percent while Paris and Frankfurt each lost 0.7 percent.
Currency traders also took fright,
fleeing into the safe-haven yen. The greenback fell to 103.73 yen in
Tokyo, down from 104.12 yen in New York and well off the levels of above
105 yen seen Tuesday.
Analysts say a Trump win could also lead
the Federal Reserve — which ends a policy meeting on Wednesday — to put
off an expected December interest rate hike owing to worries about his
effect on the economy.
“Even if the Fed does signal an
inclination to lift rates in December, markets will take the view that
this is unlikely if a Trump victory leads to uncertainty and a surge in
financial-market volatility,” Ric Spooner, chief market analyst in
Sydney at CMC Markets, said in an e-mail to clients, according to
Bloomberg News.
However, the dollar was sharply up at
19.30 Mexican pesos from 18.85 pesos Tuesday. The peso is considered a
proxy for Trump’s chances owing to his anti-Mexican rhetoric throughout
the campaign including his pledge to remove undocumented migrants, build
a wall and tear up a trade deal.
The greenback also rallied against
higher-yielding, riskier Asia-Pacific units, soaring 0.9 percent against
the South Korean won and 0.5 percent versus the Australian dollar.
A week-long retreat in oil prices also
extended in Asia, with both contracts down almost a tenth from recent
highs as investors grow worried about the chances of success for OPEC’s
September agreement to cut output.
– Key figures around 0800 GMT –
Tokyo – Nikkei 225: DOWN 1.8 percent at 17,134.68 (close)
Hong Kong – Hang Seng: DOWN 1.5 percent at 22,810.50 (close)
Shanghai – Composite: DOWN 0.6 percent at 3,012.73 (close)
London – FTSE 100: DOWN 0.6 percent at 6,877.77
Euro/dollar: DOWN at $1.1054 from $1.1056 Tuesday
Dollar/yen: DOWN at 103.73 yen from 104.12 yen
Pound/dollar: UP at $1.2244 from $1.2241
Euro/pound: UP at 90.38 pence from 90.32 pence
Oil – West Texas Intermediate: DOWN 37 cents at $46.30 per barrel
Oil – Brent North Sea: DOWN 31 cents at $47.83
New York – Dow: DOWN 0.6 percent at 18,037.10 (close)
AFP
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