Global stocks steady ahead of U.S. election

Global stock markets were steady Tuesday, following strong Wall Street gains on Monday.

A peek at markets

Germany’s DAX was lower, along with France’s CAC-40. But London’s FTSE 100 was stable.

In Asia, the Shanghai Composite Index gained along with Hong Kong’s Hang Seng. Seoul’s Kospi also added, while India’s Sensex rose and Sydney’s S&P-ASX 200 gained. Tokyo’s Nikkei 225 was nearly unchanged, and benchmarks in New Zealand, Taiwan and Southeast Asia also rose.

Meanwhile, Wall Street was set for a subdued opening, with futures for the Dow Jones industrial average and the S&P 500 down–as of 9:31am EST, the S&P 500 was down by 0.18%. The S&P/TSX also dipped at open. Click here for more on markets.

So far, the U.S. dollar has risen and the euro gained.

Current polls

Hillary Clinton has appeared to gain an edge over rival Donald Trump, but analysts say the race is too close to call. Traders are hedging their positions.

Real-time election forecasting

• Slate.com has aggregated poll results from FiveThirtyEight, the Princeton Election Consortium and others.
• RealClearPolitics tracks polls by date, race and topic.

Still, Clinton’s position has improved, following the FBI announcing that its review of newly discovered Clinton emails found no evidence to warrant charges.

But unease had ratcheted up in recent weeks over signs the race was tightening. Clinton is seen as more favourable to trade, while Trump has unnerved markets by calling for controls on imports and immigration. That triggered the longest losing streak for the S&P 500 since 1980.

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• Help client prepare for U.S. election fallout
• No love for Trump brand

What are analysts saying?

“Markets are moving toward pricing in a Clinton victory, but not fully, given the painful lesson from Brexit,” Mizuho Bank said in a report. “We expect market volatility to increase somewhat tomorrow as U.S. exit polls and elections results start streaming in.”

Nigel Green, founder and CEO of deVere Group, says in a release that if Clinton doesn’t win, there will be a “double whammy negative impact” on markets.

He explains, “Should [Clinton] win, global financial markets will react favourably as she is seen to represent the status quo, whereas Trump is much more of an unknown and, therefore, will create uncertainty and the markets will react accordingly.”

But 2016 has been a year of surprises, notes Green. “Don’t forget the markets priced in a ‘remain’ win [for] the Brexit referendum and got it wrong; indeed, the pound was being traded at 1.5 against the U.S. dollar on the day of the vote.”

He warns, “Complacency and full assumptions must be avoided. This is particularly important because if Trump prevails, we can expect, in the immediate aftermath, a […] negative impact on the markets. This is because the likely sell-offs will be compounded by the markets having priced in a Clinton victory. Plus, the markets tend to have knee-jerk reactions to these kind of events.”