US election uncertainty weighs on global markets and dollar

November 2, 2016

LONDON (AP) — Stock markets around the world and the U.S. dollar fell Wednesday as uncertainty over the U.S. presidential election kept investor sentiment in check. 460x-1

KEEPING SCORE: In Europe, Germany’s DAX dropped 0.7 percent to 10,459 while the CAC 40 of France lost 0.6 percent to 4,445. Britain’s FTSE 100 lost 0.3 percent to 6,897. U.S. markets were also headed for a lower opening, albeit modest ones — Dow futures and the broader S&P 500 futures were down 0.1 percent.

ELECTION WATCH: Investors are increasingly focusing on the U.S. presidential race, as polls between Hillary Clinton and Donald Trump appear to have tightened following last week’s news that the FBI had opened a new investigation into Clinton’s private email server. The narrowing in the race has brought more uncertainty — something that investors rarely like. The VIX, a volatility measure dubbed the “fear gauge” for Wall Street, jumped 14 percent on Tuesday to its highest level since June. The dollar was also struggling amid the uncertainty. The euro was up 0.4 percent at $1.1095 while the dollar 0.8 percent to 103.28.

QUOTABLE: “The lead-up to the U.S. presidential election was always expected to be lively but the events of the last couple of days has seriously taken its toll on investor sentiment, as is clearly evident across a number of asset classes again today,” said Craig Erlam, senior market analyst at OANDA.

FED WATCH: Aside from the election cliffhanger, the Fed will wrap up a two-day meeting on Wednesday. With the election just six days away, the Fed will likely keep a low profile to try to ensure it doesn’t become part of the debate at the close of a tumultuous political campaign. As a result, it’s expected to keep interest rates unchanged though it may signal in its accompanying statement that a rate hike is likely at the next meeting in mid-December as many expect. On the other hand, the Fed might decide to offer no hints Wednesday of a forthcoming rate hike in order to remain entirely neutral at a sensitive political moment.

THE DAY IN ASIA: Japan’s Nikkei 225 index fell 1.8 percent to 17,134.68 as the yen rose against the U.S. dollar. The Hang Seng of Hong Kong dropped 1.5 percent to 22,810.50 and South Korea’s Kospi dropped 1.4 percent to 1,978.94. The S&P ASX/200 of Australia sank 1.2 percent to 5,229.00 and the Shanghai Composite lost 0.6 percent to 3,102.73. Shares also fell in Southeast Asia and Taiwan.

ENERGY: U.S. benchmark oil futures lost 74 cents to $45.93 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, was down 71 cents at $47.43 a barrel.