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Global Stock Markets Stage Relief Rally After FBI Clears Hillary Clinton in Email Probe by EasyMarkets

 

Wall Street and European stocks surged on Monday after the FBI cleared Hillary Clinton of any wrongdoing related to a new batch of emails linked to her private server. Based on the final election polls, the news may have paved the Democratic nominee’s way to the White House.

“Based on our review, we have not changed our conclusions that we expressed in July,” FBI Director James Comey wrote in a letter to congressional leaders on Sunday.

Just 11 days ago, Comey dropped a bombshell on the Clinton campaign by announcing the bureau had discovered a new batch of emails connected to a previous probe of whether Clinton mishandled classified information.[1] The new investigation dented Clinton’s standings in the polls and led to a massive plunge in global equity prices.

On Monday, polls and equities reversed.

Bloomberg’s final election poll showed 44% of likely voters backed Clinton versus 41% who support Republican nominee Donald Trump. Separate polls from CBS News, FOX News, Reuters/Ipsos and ABC/Washington Post also showed a clear advantage for Clinton. The IBD/TIPP Tracking poll was the only major survey predicting a narrow edge in the popular vote for Trump.[2]

As was to be expected, Donald Trump criticized the FBI’s handling of the new investigation.

“You can’t review 650,000 new emails in eight days. You can’t do it, folks,” Trump said. “Hillary Clinton is guilty. She knows it, the FBI knows it, the people know it, and now it’s up to the American people to deliver justice at the ballot box on November 8.”[3]

US stocks staged a massive relief rally Monday, posting their best day since March. The large-cap S&P 500 Index spiked 2.2% to 2,131.52, snapping a nine-day losing streak that was the worst in 36 years. The Dow Jones Industrial Average surged 71.32 points, or 2.1%, to 18,259.60. The technology-heavy Nasdaq Composite Index rose 2.4% to 5,166.27.[4]

European stocks rose across the board, posting their biggest rally in six weeks.[5] The Stoxx Europe 600 Index ended 1.5% higher. In individual bourses, the UK’s FTSE 100 rose 1.7%, Germany’s DAX added 1.9% and the CAC 40 in Paris finished 1.9% higher.

The US dollar also skyrocketed against a basket of other major currencies, as a Clinton presidency could pave the way for an interest rate hike by the Federal Reserve next month. The Fed has remained idle since last December when it raised rates for the first time in almost a decade.

A surge in equities and the US dollar sent precious metals tumbling, with gold futures practically reversing last week’s gain. Gold for December delivery plunged $25.10, to 1.9%, to settle at $1,279.40 a troy ounce Monday. That was the biggest one-day drop in five weeks.[6] Silver prices also declined, as risk aversion evaporated.

Market participants might expect a similar response later this week should Clinton secure the presidential nomination on Tuesday. Early voting has already revealed that Clinton was polling ahead of Trump in key battleground states.[7] Bookies are also expecting Clinton to prevail, as are all the major news outlets, including Bloomberg.

It remains to be seen whether a Clinton presidency will be beneficial for the markets over the long term. In the short term, her election is likely to soothe investors’ concerns about a more fragmented global environment under Donald Trump.

The election results will likely be known late Tuesday evening. The reaction will begin in Asia as well as in the futures markets. Currency markets could also experience volatility in the early hours of Wednesday.

[1] Eric Bradner, Pamela Brown and Evan Perez (November 7, 2016). “FBI clears Clinton – again.” CNN.

[2] Real Clear Politics. Latest Polls.

[3] Eric Bradner, Pamela Brown and Evan Perez (November 7, 2016). “FBI clears Clinton – again.” CNN.

[4] S&P 500 Futures Stage Relief Rally After FBI Clears Clinton

[5] Sara Sjolin and Carla Mozee (November 7, 2016). “European stocks jump by most in 6 weeks as FBI sparks global relief rally.” MarketWatch.

[6] Barbara Kollmeyer and Myra P. Saefong (November 7, 2016). “Gold suffers biggest one-day percentage loss in 5 weeks.” Market Watch.

[7] Andre Tartar and Ben Brody (November 4, 2016). “On Eve of Election, Odds Point to Clinton Win With Democratic Senate and GOP House.” Bloomberg Politics.

 

Sourcehttps://www.easymarkets.com

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