Global Stocks Fall on Wednesday — U.S. Election Jitters Continue

Haven assets rise as investors wait for an interest rate decision from the Federal Reserve

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Updated Nov. 2, 2016 5:08 a.m. ET

Jitters around the U.S. presidential election sent stocks lower Wednesday while haven assets climbed, just hours ahead of an interest rate decision from the Federal Reserve.

The Stoxx Europe 600 fell 0.6% in morning trading after a downbeat close on Wall Street, extending Europe’s longest losing streak since February.

A Washington Post-ABC News tracking poll Tuesday showed Republican candidateDonald Trump leading in the U.S. presidential race, sparking uncertainty after investors had broadly priced in a victory for Hillary Clinton.

“The possibility of a Trump victory has started to spook markets,” said Rebecca O’Keeffe at stockbroker Interactive Investor. “Despite multiple other market risks and global central bank decisions due, the only thing that really matters to investors is who will claim victory next week, with the outcome likely to deliver dramatically different stock market reactions,” she wrote in a note.

Shares in Asia were red across the board on Wednesday, with Japan’s Nikkei Stock Average shedding 1.8% and Hong Kong’s Hang Seng falling 1.5%.

Oil also came under pressure, with Brent crude down 1% at $47.65 a barrel.

Futures pointed to a 0.3% opening loss for the S&P 500, which has fallen for six consecutive trading days in its longest losing streak since August 2015.

The CBOE Volatility Index, which measures investors’ expectations for stock swings, also closed higher Tuesday for a sixth consecutive session, but strategists noted it remained below its long-term historic average and that it is common for volatility to increase from ultralow levels ahead of a major political event.

As investors shied away from risk, the dollar fell 0.4% against the yen to ¥103.5750, while gold rose 0.8% to $1,298 an ounce, following on its biggest daily gain since September.

Sovereign bond yields, which move inversely to prices, came under pressure. The yield on the 10-year U.S. Treasury note fell to 1.795% from 1.822% on Tuesday, while 10-year German bund yields fell to 0.129% from around 0.180%.

Donald Trump and Hillary Clinton finish their third and final 2016 presidential campaign debate at UNLV in Las Vegas, Nevada, on October 19.
Donald Trump and Hillary Clinton finish their third and final 2016 presidential campaign debate at UNLV in Las Vegas, Nevada, on October 19. PHOTO: REUTERS
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The Mexican peso, which has moved tightly in line with U.S. presidential polls, extended declines Wednesday to fall 0.5% against the dollar. The euro rose 0.2% against the dollar, while the broader WSJ Dollar Index fell 0.2% after three sessions of declines.

Losses in European stocks were steepest in the banking sector, with shares of HSBC Holdings, BNP Paribas and Banco Santander dragging the Stoxx 600 lower. Only the health-care sector advanced, recovering slightly from a 1.8% fall in the previous session.

Later Wednesday, the Federal Reserve is widely expected to leave interest rates unchanged at the conclusion of its November meeting, but investors will be watching closely to see how strong a signal the Fed makes about a move higher in December.

The Fed voted 7-3 in September to keep rates unchanged in a range between 0.25% and 0.5%, stating that the case for higher rates “has strengthened,” but it wanted to wait “for the time being” for “further evidence” of a strengthening economy before acting.

Fed-fund futures, used by investors to bet on central bank policy, pointed to just a 7.2% chance of a rate rise later Wednesday, but a 73.6% chance of higher rates by the conclusion of the December meeting.

Write to Riva Gold at riva.gold@wsj.com

http://www.wsj.com/articles/europe-stocks-fall-on-u-s-election-jitters-1478075733

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One Response to “Global Stocks Fall on Wednesday — U.S. Election Jitters Continue”

  1. daveyone1 Says:

    Reblogged this on World Peace Forum.

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