News World Markets fall on fears of a Trump victory

Markets fall on fears of a Trump victory

The presidential election is providing headaches for the market in the US. Photo: Getty
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Jitters about a potential Donald Trump presidency have sent share markets across the Asia-Pacific hurtling lower as latest polling indicates the November 8 election will be tight.

In Australia, the ASX 200 lost 1.2 per cent to 5229, following falls on Wall Street on Wednesday (US time).

The latest national polling shows presidential candidates Hillary Clinton and Mr Trump are neck and neck, with Mr Trump leading by just one point in the American ABC News poll, which is well within the margin of error. An average of national polls puts Ms Clinton ahead by four points.

“With polls suggesting that Donald Trump’s prospects are improving, that caution is translating into nervousness,” wrote Ric Spooner, chief market analyst at CMC Markets in a note to clients.

Shares across the Asia-Pacific also dropped, with Hong Kong’s Hang Seng index down 1.4 per cent, while Japan’s Nikkei tumbled 1.9 per cent. The New Zealand bourse closed 1.1 per cent lower.

“For markets, a surprise Trump victory would create volatility but we expect the US dollar to strengthen whoever wins,” a NAB report on the US presidential election said.

“The emphasis on more government spending by both candidates suggests a shift away from monetary stimulus towards fiscal policy. This would help sustain the trend to higher yields and a steeper yield curve in US financial markets.”

European markets continue decline

The US Federal Reserve left interest rates on hold as was widely expected, but the prospect of a rate increase in December and a narrowing in the gap between Ms Clinton and Mr Trump, weighed on investor sentiment.

In a statement after its two-day meeting, the central bank said the economy had picked up momentum, job gains remained solid and inflation looked to be moving towards its 2 per cent target.

Westpac’s senior market strategist Imre Speizer wrote in a note that the focus on inflation was particularly telling.

“The language on inflation has been firmed up, the statement noting that inflation and inflationary expectations have picked up,” he wrote.

“The fed also dropped the language that it expects inflation to remain low in the near term before rising to two per cent, and just simply says they expect it to rise to two per cent.

“The near term policy guidance is nearly identical to the language used in September: ‘The Committee judges that the case for an increase in the federal funds rate has continued to strengthen but decided, for the time being, to wait for some further evidence of continued progress toward its objectives’.

“The only alteration here is the addition of ‘continued’.

“In short, the Fed overall has a more balanced take on inflation and has slightly strengthened the language around the case for a hike.”

European shares have posted their eighth straight day of declines, with the banking sector among the biggest losers in the overnight session.

The local share market is poised to fall again at the open, following steep losses yesterday, with the ASX SPI 200 down 0.3 per cent to 5,168.

The Australian dollar edged higher overnight and at 7:30am (AEDT) was buying 76.53 US cents.

West Texas crude oil had eased to $US45.27 per barrel, a barrel of Tapis was worth $US47.11 and spot gold had risen to $US1,297.28 an ounce.


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