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Category: Business, Economics and Finance / Markets / Currency / Stockmarket / Futures

Wall Street rallies on growing chance of Clinton victory

Tuesday, 8 Nov 2016 05:50:45 | Sue Lannin

Hillary Clinton is seen as more supportive of the economic status quo. (AP: Andrew Harnik)

Wall Street has rallied on a growing chance of a Hillary Clinton victory, after the FBI said it would not file criminal charges against Democrat presidential nominee because of her use of a private email server.

Markets at 8:15am (AEDT)

  • ASX SPI 200 futures +0.2pc at 5,253
  • AUD: 77.14 US cents, 69.80 euro cents, 62.17 British pence, 80.56 Japanese yen, $NZ1.0530
  • US: Dow Jones +2.08 pc at 18,260, S&P500 +2.22 pc at 2,132, NASDAQ +2.37 pc at 5,166
  • Europe: FTSE +1.7pc at 6,807, DAX +1.9pc at 10,457, Eurostoxx50 +1.9 pc at 3,009
  • Commodities: Brent oil +1.4pc at $US46.24/barrel, Gold -1.8pc at $US1,1280.51/ounce, Iron ore +$US2.10 at $US66.80/tonne

The optimism comes on the eve of the US presidential election because Mrs Clinton is seen as more supportive of the economic status quo whereas Republican contender, Donald Trump, represents uncertainty.

The Dow Jones Index put on 2 per cent, while the Nasdaq and the S&P500 both surged more than 2 per cent.

Financial and health stocks led the gains on the S&P500 which had lost ground in the previous nine trading sessions because of election jitters, its longest losing streak since 1980 according to AP.

Online jewellery retailer, Blue Nile, jumped by one third to $US40.72 on the announcement the company is being bought by a private equity consortium for $US500 million.

Pharmaceutical companies, Biogen and Ionis Pharmaceuticals, said they had stopped a test for a rare genetic muscular disorder, spinal muscular atrophy, early because the trial was successful.

Biogen shares rose 6.8 per cent to $US295.36. Ionis shares closed up 18 per cent to $US32.22.

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The IShares MSCI Mexico ETF, known as the "Trump ETF" rose 5 per cent to 51.88. The index is viewed as a barometer for a Mr Trump victory because his policies are seen as negative for the Mexican economy.

The volatility index, the VIX, fell 17 per cent, its biggest one day fall since late June when Britain voted to leave the European Union.

Phil Blancato, the head of Ladenburg Thalmann Asset Management, said investors were not acting rationally.

"This is a reaction to less uncertainty," he said.

"In those kinds of markets, people are jumping into stocks that they think are cheap. And what are the cheapest right now? Financials and healthcare."

The Australian market looks set for a modest gain on the open after yesterday's rally with the ASX SPI 200 Index up 0.2 per cent at 8.15 am.

Commodities like oil and iron ore also gained as investors looked for riskier assets.

Spot gold lost attractiveness as a safe haven as stocks and the greenback rallied on the news about Mrs Clinton.

The Australian dollar jumped above 77 US cents overnight helped as markets anticipate a Mrs Clinton win in the presidential election.

"The market is telling you they feel Clinton has the election in her sights and judging by the strong moves in healthcare [globally], the view is we see the Democrats take back the Senate and the Republicans retaining the House, although the race for the Senate in actuality is a 50/50 proposition," IG market strategist Chris Weston said.

"Traders are focused on the outcome of the US Electoral College vote and while various estimates have been thrown around they all have Clinton wining, with anywhere between 274 to 322 seats (the victor needs 270)," Mr Weston said.

The greenback rose against major currencies, but fell 1.8 per cent to 18.67 Mexican pesos.

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