- Advertisement -
- Advertisement -

Related

Final Call: Polls Point To Clinton Market Favourite

Industry Report

- Advertisement -

 

Stockholm (HedgeNordic) – With the final round of polling putting Hillary Clinton on average 3-4 points ahead of Donald Trump nationally in the U.S. presidential race, markets are increasingly confident of having long priced in a victory for Mrs Clinton. By comparison, the 2012 presidential race showed Mitt Romney within 1-2 points of President Obama in the final days, where Mr Obama went on to win the election with 3.9% nationally. This was in part thanks to a superior turnout operation, an advantage the democrats are expected to maintain this election cycle. In addition, the U.S. Senate remains too close to call, despite Republicans defending a majority of seats, while the House of Representatives appears set to remain in Republican control, indicating a ticket-splitting phenomenon geared primarily against Mr Trump personally.

However, the decision by the FBI to continue reviewing Mrs Clinton’s e-mails on October 28 and the spectre of possible indictment appeared to narrow the race in multiple battleground states, unnerving investors and sending a ripple through financial markets. Bond yields, for example, dropped as the news leaked, as investors rushed out of riskier assets such as stocks and into treasuries. Mrs Clinton is seen by most investors as more predictable than her rival, with Brookings, for instance, forecasting global markets could decline 10-15% if Mr Trump were to prevail. Markets calmed somewhat following FBI director James Comey’s announcement Sunday afternoon that its additional review found nothing to change its previous decision in August to not recommend legal action against Mrs Clinton. The Dow Jones industrial rose 300 points, the S&P 500 advanced more than 1.8%, having fallen for the previous consecutive 9 days, and the Nasdaq composite surged 2.2% Monday.

 

In addition, the dollar rose as much as 1.4% against the yen early Monday while the euro dropped 0.5%, with the big winner being the Mexican peso, which rose 2.2% following the news. The peso has acted as something of a bellwether during the election, with the currency moving inversely with perceptions of Mr Trump’s chances due to his comments about immigration and NAFTA.

According to the WSJ, investors have also worried about whether Mr Trump would respect the independence of the Federal Reserve or encourage a default on the national debt. Besides focusing on the top of the ticket, however, one thing domestic markets in the U.S. are looking at may be the possibility of divided government, with the likelihood of gridlock in Washington D.C. remaining, which would make policy-making more incremental and predictable. The precise makeup of Congress would also affect different sectors and asset classes differently, with, for instance, a democratic majority in the Senate possibly leading to a push from the party’s left wing for increased regulation of the banking sector. Fears of additional health-care legislation could also lead to selloffs in the biotech and pharmaceutical sectors.

Markets abroad such as Europe, however, remain nervous, smarting from the Brexit experience and apprehensive about Mr Trump’s protectionist rhetoric on trade and erratic proposals on, for example, leaving the North Atlantic Treaty Organization.  Conversely, energy stocks could outperform the market in the event of a Trump victory, considering that he has pledged to roll back regulations.  The bond market is also expected to benefit from a Trump victory due to the uncertainty he represents, as are gold prices, up 3% in the past month, particularly in relation to expectations that Mr Trump’s proposed tax cuts could increase the budget deficit.

Nonetheless, based on the very last round of polling, Mrs Clinton, who also leads in hedge fund contributions, looks set to prevail. Investors will be holding their breath the next 24 hours to see whether the polls are accurate, or whether they are in for another Brexit-style shock.

 Picture: (c) sbenjamin-haas-fotolia-com

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

Glenn Leaper, PhD
Glenn Leaper, PhD
Glenn W. Leaper, Associate Editor and Political Risk Analyst with Nordic Business Media AB, completed his Ph.D. in Politics and Critical Theory from Royal Holloway, University of London in 2015. He is involved with a number of initiatives, including political research, communications consulting (speechwriting), journalism and writing his post-doctoral book. Glenn has an international background spanning the UK, France, Austria, Spain, Belgium and his native Denmark. He holds an MA in English and a BA in International Relations.

Latest Articles

Rising Adoption of Quantitative Investment Strategies Among Nordic Investors

From a high-level perspective, there is a clear trend of increasing adoption of quantitative investment strategies (QIS) among Nordic institutional investors, either through the...

EU Plans Stress Test for Hedge Funds and Non-Bank Firms

European regulators are planning a stress test to identify vulnerabilities beyond the traditional banking sector, focusing on less regulated entities such as hedge funds,...

ALCUR Fonder Continues Hiring Spree

Following two earlier additions this year, ALCUR Fonder continues to expand its portfolio management team at a notable pace. The Stockholm-based hedge fund boutique...

Nordic Private Markets Modernize with Data-Centric Trade Lifecycle Automation

By Anders Stengaard Jensen at Indus Valley Partner: In recent years, asset managers in Nordic countries have accelerated efforts to modernize trade operations, particularly...

Norwegian Hedge Fund Industry Sees Major Boost with New Launch

The Swedish and Danish hedge fund industries remain closely matched in size, with Denmark recently edging ahead of Sweden. While still less than half...

Atlant Funds Hold Up in May Despite Mistimed Market Call

Macroeconomic and market forecasts are notoriously difficult, even for experienced hedge fund managers. What matters more than being right, however, is ensuring that incorrect...

Allocator Interviews

In-Depth: High Yield

Voices

Request for Proposal

- Advertisement -
HedgeNordic
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.