Wall Street’s Peso

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I am sure it’s not just the stock market. Neither candidates are looking that good at the moment but I dread to even imagine the horror that a trump presidency would bring.

The whole world looks on with a somewhat bewildered amusement. How did it even get this far? Soon we find out who the next president of the US will behave? A power hungry war criminal? Or an out of touch inexperienced billionaire? Interesting viewing either way.


Powered by Guardian.co.ukThis article titled “Wall Street closes higher and Mexican peso hits two-month high ahead of election results – as it happened” was written by Graeme Wearden (now) and Nick Fletcher, for theguardian.com on Tuesday 8th November 2016 21.33 UTC

The markets have spoken. But are they right?

The financial markets are now closed, with investors having pushed shares higher in Europe and the US today on predictions that Hillary Clinton is poised to become America’s next president.

If they’re mistaken, and the polls are wrong, there’s going to be an almighty panic when everyone returns to their desks.

Oxford Economics say we can expect “moderate gains” if Clinton wins, and a “significant selloff” if she doesn’t.

In short, markets have already spoken. Equities will be the asset class that will gain the most in case of a Clinton win and equally lose the most if Donald Trump moves into the White House. Bond markets will likely rally a bit if Trump wins.

Certain emerging market asset classes would also move sharply. The Mexican peso would depreciate by between 10 and 22% in case of a Trump win and its sovereign spreads rise by between 80 and 120bps.

Asian traders will be in the firing line first – their markets will open as the early results come in. So we’ll launch a new liveblog tracking the markets in a few hours.

I’m off to nervously watch the results have a nap, and will be back early tomorrow. In the meantime, stay tuned to our main US elections liveblog. Goodnight! GW

Updated

Wall Street closes higher as election results loom

DING DING! The closing bell of Wall Street has been rung, as traders pushed shares higher for the second day running.

In a “risk-on mood”, the Dow Jones industrial average has ended the day 72 points higher at 18,331, up 0.4%.

The S&P 500 shows similar gains, as traders continue to bet on a Clinton victory tonight.

The Wall Street close tonight

And the Mexican peso is still trading at a two-month high, in a clear sign that traders expect Donald Trump to fail in his bid to reach the Oval Office.

The mexican Peso against the US dollar (a fall = a stronger dollar)
The mexican Peso against the US dollar (a fall = a stronger dollar) Photograph: Bloomberg TV

Updated

With fifteen minutes until trading ends in New York, the Dow is holding onto its gains.

It’s currently up 104 points, or 0.5%, as investors continue to anticipate a Clinton victory. Could they be too complacent?

This has not been the most dramatic day in the stock markets, in truth. But it’s all going to change in a few hours, once the results come in.

Chad Morganlander, a money manager at Stifel, Nicolaus & Co, says traders should buckle up.

He told Bloomberg that:

“Put your seat belts on because this is going to be a bumpy ride…

As the polls close later today, investors will be moving in a chaotic fashion to get ahead of the information flow.”

Over in Asia and Australia, traders are heading to their desks to watch the US election results unfold.

IG’s Chris Weston says the market still feel that Hillary Clinton has the edge. But memories of the Brexit referendum this summer haven’t faded.

He reminds us how events unfolded in June:

As soon as Newcastle and Sunderland broke and the markets thought ‘this wasn’t supposed to happen’, then the sky darkened and the markets caved in.

This election isn’t perhaps as binary as the UK referendum, but the way financial markets react today could be fairly similar in the sense that if Trump starts picking up the 50/50 states like Florida, New Hampshire, Nevada and potentially some of the more certain Democrat battlegrounds then the market could be wild.

Of course, we mustn’t forget that there is a real battle for the Senate too and its 50/50 that the Republicans can hold onto the Upper Chamber.

Updated

The Mexican peso is continuing to rally, and just hit a new two-month high:

Almost all of the 30 companies on the Dow Jones industrial average are up today, but the gains are fairly muted.

Consumer good group Procter and Gamble, fast food chain McDonald’s and drinks group Coca-Cola are among the top risers:

The best and worst-performing Dow stocks today
The best and worst-performing Dow stocks today Photograph: Thomson Reuters

Updated

Less than one hour to go until trading closes on Wall Street, folks!

And the New York stock market is still on track to finish higher tonight, as investors continue to predict a victory for Hillary Clinton.

The rally has weakened a little, though, as investors show some caution about the election:

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Michael James, managing director of equity trading at Wedbush Securities in Los Angeles, told Reuters that:

“We were dramatically oversold. People were nervous Trump would win.

“There’s likely to be additional volatility in both directions between now and the end of the day.”

There were lots of nervous faces on Wall Street today, as traders kept one eye on the markets and the other one on the unfolding election.

Here are some new pictures from the NYSE trading floor:

Traders work on the floor of the NYSETraders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 8, 2016. REUTERS/Brendan McDermid
Traders work on the floor of the NYSETraders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 8, 2016. REUTERS/Brendan McDermid

Jeremy Cook of World First is also concerned about the effect that the VoteCastr realtime polling is having on the markets….

MXN = the Mexican peso

Updated

Here’s a neat graph showing how the US stock markets pushed higher today after VoteCastr said Hillary Clinton was leading in key states like Florida (even though we don’t know how accurate its system actually is)

Standard Life: What the election will mean for the Fed

Jeremy Lawson, chief economist at Standard Life Investments, has just published a note about the implications of a Trump or Clinton victory.

If Hillary takes the White House the Lawson says the status quo will be maintained. There’ll be gridlock in Washington but the economy will maintain its slow but steady recovery, and the Federal Reserve could hike borrowing costs next month.

He writes:

“ In this ‘status quo’ outcome the combination of a healthier economy and reduced policy uncertainty should allow the Fed to recommence normalising interest rates at its December meeting, though the pace of rate increases will remain gradual.”

But if Trump wins…

“Donald Trump’s election would introduce more uncertainty to the outlook for government policy, economic activity and the Fed, though those risks are not all to the downside. Initially, considerable market volatility is possible but it is actual policy decisions that will dictate the trajectory for the economy.”

Lawson is betting Trump’s tough trade talk is largely hot air and if he cuts regulation on the finance, energy, telecoms and healthcare sectors, that could boost earnings.

“If, on the other hand, a President Trump turns out to be serious about pursuing a much more protectionist policy agenda, the negative consequences for economic activity and corporate margins could easily offset the benefits of fiscal easing, preventing the Fed from tightening policy for some time.”

The Wall Street Journal is also reporting that the live voting data produced by VoteCastr is affecting stock prices.

The WSJ’s Paul Vigna explains:

Wall Street traders are moving markets Tuesday based on a small group of websites that purport to offer real-time estimates of the election results.

It’s a first for traders, and for the news media. It has been a longstanding policy for mainstream media to not report on exit-polling data while polls are still open on Election Day, so as to avoid discouraging voters in western states from voting.

Today, though, websites Vice and Slate plan on providing what they are characterizing as “live” voting projections throughout the day.

To be sure, this is an experiment, and a controversial one. Regardless, the numbers are being put out there, and the market is noticing. With the Slate data showing Hillary Clinton leading in several key swing states, stocks have shot higher and bonds have fallen.

Right now, VoteCastr are giving Clinton a four point lead in the crucial state of Florida, with 48% of support vs Trump’s 44%. If the Democrats do claim Florida, it’s hard to see a Republican victory.

BUT (and it’s a big one), realtime polling forecasts are still somewhat experimental. If early voters aren’t representative of the electorate, then their projections could be skewed, for example.

Updated

Mexican peso hits two-month high

The Mexican peso has hit a two-month high today, which also suggests investors are predicting defeat for Donald Trump.

The peso has rallied to 18.4195 against the US dollar, from 18.58/ last night, a gain of 1% or so.

The peso has been very sensitive to Trump’s electoral prospects, given his attacks on Mexicans and opposition to the North American Free Trade Agreement.

The peso against the US dollar
The peso against the US dollar (lower = a stronger Peso) Photograph: Thomson Reuters

Updated

Another handy map showing when the polls close across America (add five hours for UK timing):

The VIX ‘fear’ index has fallen by 4.5% today, in another sign that US investors are looking forward to the end of the election (and who can blame them?)

Dow Jones rises higher….

The US stock market is creeping higher and higher in mid-afternoon trading, as investors cautiously anticipate that Hillary Clinton will celebrate victory tonight/tomorrow.

The Dow Jones industrial average is now up 124 points, or 0.67%, at 18,382.

The S&P 500, the broader measure of the US stock market, has gained 0.5%.

According to CNBC, the Dow is on track for its best two-day rally since the Brexit vote (it jumped by 371 points yesterday).

The news that Guam voters have (symbolically) backed Clinton is one factor.

Another factor is that analytics company VoteCastr says Clinton has the edge in some key swing stages, including Florida. But they also caution that it’s early days, with plenty of votes still to be cast.

Updated

A reason for caution about trying to predict the outcome of all this. Dominic Rushe writes:

If you want to know why investors are nervous, look at Ohio. President Barack Obama won the state in both 2008 and 2012 but the polls are giving Trump the edge this year. It’s one of a number of formerly Democrat leaning states where many blue collar voters feel left behind by Democrats.

I was in Youngstown, Ohio last week talking to business leaders and they are deeply unhappy with Obama’s legacy and worried that Clinton will just be more of the same.

They blame trade policies for the collapse of industry; this used to be steel country. And Obama’s green fuel initiatives for the collapse of the coal industry. Unemployment in Youngstown is 6%, a full percentage point above the national average, and rising. “I’d vote for Donald Duck before I’d vote for her,” Bill Strimbu, president of local trucking firm Nick Strimbu, told me.

Updated

European markets edge higher on election day

There is nervousness among investors as the US votes for its next president – the spectre of the Brexit vote and the complete inaccuracy of the polls there is still fresh in the memory – but European markets have managed to end in positive territory.

The news from Guam, a positive sign for Hillary Clinton, has given US markets a lift and helped push Europe higher too. The final scores showed:

  • The FTSE 100 finished up 36.23 points or 0.53% at 6843.13
  • Germany’s Dax was up 0.24% at 10,482.32
  • France’s Cac closed up 0.35% at 4476.89
  • Italy’s FTSE MIB rose 0.48% to 16,817.41
  • Spain’s Ibex ended up 0.2% at 8937.0
  • In Greece, the Athens market added 0.28% to 582.20

On Wall Street, the Dow Jones Industrial Average is currently up 118 points or 0.65%.

Here’s a traders guide from Goldman Sachs to what is likely to happen when as the election results come in, courtesy MarketWatch:

Updated

Markets boosted by Guam voting for Hillary

An early positive sign for Hillary Clinton – she has been backed in the tiny US island of Guam:

The Dow Jones Industrial Average, after drifting lower in early trading, is now up 72 points or 0.4%.

Updated

More on how markets would react to either Hillary Clinton or Donald Trump winning today’s election. John Higgins at consultancy Capital Economics said:

A victory for Hillary Clinton in the presidential race was heavily discounted on the day of the vote. So we doubt that there will be much of a response in the markets today if she has triumphed. But a win for Donald Trump could cause major upheaval.

For example, a victory for Trump would probably send the dollar down sharply against other “majors”, particularly the Swiss franc and the Japanese yen. We would expect the yen/dollar exchange rate to break below 100, compared to a current level of nearly 105. We would also anticipate a sharp rise in the dollar against some emerging market currencies. For example, the Mexican peso could hit 25/$, versus 19/$ or so now.

In our view, a Trump win would also have large effects on equities. For example, we think the S&P 500 would fall below 2,000, compared to a current level of around 2,130. And many stock market indices elsewhere would probably fare worse. The Nikkei 225 could be hit especially hard by accompanying strength in the yen – we wouldn’t be surprised if it tumbled below 15,000, versus a current level of more than 17,000. And there would probably a broad-based rout in emerging markets.

Traders on the floor of the New York Stock Exchange as the US votes
Traders on the floor of the New York Stock Exchange as the US votes Photograph: Brendan Mcdermid/Reuters

We suspect that US Treasuries would rally if Trump won, with the 10-year yield falling to 1.5% from around 1.8%. Admittedly, he has talked about defaulting on the national debt, has a fiscal plan that includes unfunded tax cuts and has proposed trade tariffs that would boost inflation. But a plunge in risky asset prices would prompt a reassessment of the near-term outlook for Fed policy and boost the demand for safe havens.

Meanwhile, the initial uncertainty following a victory for Trump would surely undermine the prices of industrial commodities, including oil and base metals, while gold would benefit from a renewed burst of safe-haven demand. In the short term, therefore, we would expect crude oil to fall to around and gold to surge to at least ,400. The impact of the dollar is a further wildcard. A big fall in the value of the US currency would limit the downside for the dollar prices of industrial commodities, while adding to the upside for gold.

Back with the presidential election, and if Hillary Clinton wins, it would give a green light to the Federal Reserve to raise US interest rates in December, says Kathleen Brooks, research director at City Index:

Markets have rushed to price in a rate hike from the Fed in recent days, the current implied probability of one 25 basis point hike next month is 82%, up from 68% a week ago. This is a sign that markets are confident that Hillary Clinton will win the US Presidential election tonight. It also suggests that should she lose the election and Trump win, there could be a major readjustment in financial markets, with Fed rate hike expectations falling sharply, a dramatic fall in US bond yields, and a decline in the US dollar.

The US Federal Reserve building in Washington, DC.
The US Federal Reserve building in Washington, DC. Photograph: Karen Bleier/AFP/Getty Images

…While we think a Clinton win is more likely, we are still gearing up for major financial market volatility if this proves not to be the case.

Our clients also appear fairly confident about a Clinton win, however, this is reflected more in their foreign exchange positions than in their stock market positioning. Our clients are long the US dollar in the lead up to the election result, and 75% of clients trading dollar/yen are long. The fact that our clients are willing to short the yen at this stage, suggests that they do not see a shock election result from the US.

Although we expect stock markets to stage a relief rally if we see Clinton win the White House later today, we believe that any stock market rally is likely to be short-lived, as markets instead focus on the risk of rising bond yields and a Fed rate hike in a few weeks, which could be bad news for stocks into the end of the year.

Away from the US election for a moment, and more signs of a slowing UK economy.

The National Institute of Economic and Social Reseach has estimated that UK output grew by 0.4% in the three months to the end of October, compared to growth of 0.5% in the three months to September.

The think tank’s Oriol Carreras said “Our estimates suggest the economy grew by 0.4 per cent in the three months to October. Robust consumer spending growth continues to support the economy. Looking ahead, this contribution from consumers is expected to wane over the course of next year due to a substantial rise in the rate of inflation.”

Its latest quarterly forecast published earlier this month predicted GDP growth of 2% per annum in 2016 and 1.4% in 2017.

Quarterly growth rates
Quarterly growth rates Photograph: NIESR

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The three main US stock market indices at the start of trading, plus the Canadian market Photograph: Thomson Reuters

No Clinton relief rally today (yet anyway)

A sign for Wall Street in New York..

US markets have lost a bit of steam since yesterday’s euphoric rise on the news that the FBI would not re-open its inquiry into Hillary Clinton’s emails.

The Dow Jones ended yesterday up 2%, the S&P 2.22% and the Nasdaq 2.37% as Clinton inched further ahead of Trump in the polls.

As the bell rung on election day all the stock market indices are down a fraction of a percent. It’s going to be a long, nail-biting day on Wall Street.

Separately…a former advisor to two former Republican president tweets:

Updated

Ding ding! The Wall Street opening bell is ringing, to start the election day trading session.

The main indices are dipping around 0.2%in early trading. More in a moment….

Get up to speed with the Guardian’s US election coverage

You can get ready for tonight’s election drama with the Guardian’s ‘survival guide’,.

It lays out when the key action should happen (complete with food and drink recommendations)

We’ve also laid out five potential scenarios for the election, including how Donald Trump could be swept to the White House.

And we’ve also analysed the latest opinion polls, including for crunch states such as Florida:

Naeem Aslam of Think Markets says traders are acting like ‘zombies today’.

He flags up that the ‘one week volatility’ in the US dollar-euro exchange rate has fallen sharply, since the FBI absolved Hillary Clinton of misconduct over her email server on Sunday night.

However….

this could change very much tomorrow if we do not get the expected outcome which is always a chief concern.

The euro/dollar one-week volatility
The euro/dollar one-week volatility Photograph: Think Markets

Aslam also predicts that Wall Street would plunge sharply if Trump beats Clinton.

If Trump wins the election, we are expecting the S&P500 to drop nearly 6.16 percent% and the picture will be even more vile for the emerging markets.

Updated

Traders have roused themselves from their US election torpor to drive shares in Marks & Spencer down by 4.3%.

M&S are languishing at the bottom of the FTSE 100 leaderboard, as the City shows little enthusiasm for its latest turnaround plan.

Steve Rowe the firm’s new CEO, has torn up M&S’s international ambitions, and will shut 53 overseas stores from China to Lithuania.

Rowe is also canning the clothing departments at 60 stores, as part of a new focus on food.

Given the lack of news, City traders could easily have taken today off.

And looking at the stock market right now, maybe they already have! The blue-chip Footsie index is barely changed this morning, and sterling has dipped a little.

  • FTSE 100: up 0.4 points or 0.01% at 6807
  • The pound: down 0.15% at .2381

It could be the calm before the hurricane, though. Trading floors will be pretty lively places tomorrow morning, especially if there’s a shock result.

Paul Sirani, chief market analyst at Xtrade, explains:

“The danger here of a Brexit-like shock is overblown; voter behaviour for one-off referendums is not comparable to that of routine elections.

“However, if Trump is named the 45th President of the United States, then there’s certain to be traders running across the floor throwing papers in the air. An initial overreaction, comparable to the UK Brexit experience to-date, is likely before markets settle again.”

Betfair has seen a late flurry of wagers on Hillary Clinton who currently has a 78% chance of victory at its site.

Barry Orr, Spokesperson for Betfair, says that 80% of presidential bets yesterday were on the Democratic candidate.

There’s been around £7m traded in the last 24 hours and with so much money coming into the market the odds are likely to continue to fluctuate throughout the day and into the night.

“With nearly £118m now traded it’s hard to see how it won’t surpass the £127m betting market record set by Brexit in June. It’s unlikely the market will trade anywhere near as much as Brexit did once polls were closed, which occasionally hit £10k per second, but if it does we would easily be looking at more than £150m total traded on the market.

City firms prepare for all-nighter

A City dealer.

Many City traders are preparing for a sleepless night, to help deal with a rush of action once polling results come in.

ETX Capital, for example, will be fully staffed overnight, and expects to face plenty of volatility.

Analyst Neil Wilson explains:

Market action could hinge on one or two moments – for example the Florida result, key for Trump’s chances for the presidency, is vitally important.

This will create some big opportunities in some of the most exposed markets, particularly around some of the key currency pairs, stocks and gold.

But a word of warning – there could be some wild gyrations in prices, making this potentially the most turbulent trading sessions since Brexit. Looking to the results, if key states start to lean towards Trump, we may see sizeable risk-off selling as investors flee to havens like the Swiss franc, Japanese yen and gold. US government bond yields could sink and gold would soar.

Turbulence could come quickly – polls in the vital swing states of Florida, Ohio, Pennsylvania and North Carolina close between 7pm and 8pm (EST), which is midnight-1am GMT. You can expect markets to be highly sensitive to the results from these states. If they are called for either side early we will have a very clear idea about where the markets are headed.

And if that’s not enough action, there’s also the England vs India test match!

Updated

New York traders are heading to Wall Street for what is bound to be an edgy session.

After yesterday’s 2.2% surge, the Dow is expected to dip ever-so slightly at the open.

The markers may remain dull until late tonight, when the first exit polls arrive.

The first polls close at 6pm ET, or 11pm in the UK, followed by a flurry over the next couple of hours:

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Asian financial markets will be open, of course, and could see the brunt of the early buying/selling as the winner becomes clear.

Despite yesterday’s relief rally, there’s still plenty of anxiety in the markets.

Barclays says that:

Similar to the pre-Brexit landscape, the risk premium on European equities is already near all-time highs, suggesting that investors are somewhat braced for an adverse economic outcome.

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RBC: How the markets might react tomorrow

The team at RBC have produced some predictions for how the markets will react to tomorrow’s election result:

Equities

  • S&P 500 should rally 3–4% upon a Clinton win and decline 10–12% on a Trump victory.
  • VIX [the volatility index]should decline to 13–14 upon a Clinton victory and rise to 20–25 if Trump prevails.
  • EM Equities such as Mexico, China, and others should rally under a Clinton presidency and sell off sharply under a Trump win.

Currencies and Commodities

  • Mexican Peso has become a proxy for Trump’s chances of success (moves inversely); would rally under a Clinton win.
  • Yen and other safe harbor currencies would sell off on a Clinton victory and rally if Trump prevails.
  • Gold would slide upon a Clinton win and rise on a Trump victory.

Global Rates

  • Safe Havens (Switzerland, Japan)yields would rise modestly on a Clinton victory and fall on a Trump win.
  • LatAm and Emerging Market yields would fall upon a Clinton win and move sharply higher on a Trump victory.

They also suggest that companies who provide services through Obama’s Affordable Care Act should rally if Clinton wins, as should firms exposed to global trade.

But if Tump wins, expect gold producers to rally – along with pharmaceuticals companies (as Clinton has promised to tackle high drugs prices).

Trade has been a recurring theme of the US election campaign, with Donald Trump arguing that US jobs have been ‘stolen’ by China.

That has sparked fears of a new wave of protectionism under a Trump White House. But as these graphs from Deutsche Bank show, world trade may already have hit a turning point.

Paul Donovan, UBS’s global chief economist, sounds thoroughly disenchanted with the whole US election.

In his daily note to clients, Donovan explains how politicians have a duty to combat the rise in prejudice against other groups (rather than fuelling it, ala Trump), and to explain how technological changes are changing the labo(u)r market.

Donovan says:

  • The two most unpopular candidates in US presidential history face each other in the elections today. Perhaps Her Britannic Majesty could be persuaded to resume control of the colonies? There is nothing constructive to be said today on the political noise, so perhaps we should look to the challenges ahead.
  • Prejudice is one of the biggest threats to economic and social stability. Prejudice is on the rise. Declaring a group in society to be “second class” undermines their economic contribution – increasingly so in today’s changing world. Politicians must tackle prejudice head-on; it is morally and economically the right thing to do.
  • Global trade patterns are changing. Lengthening supply chains and outsourcing are outdated as localized production reintroduces the imperial trade model, and technology means that trade in services is increasingly important. Politicians need to stop living the trade of the past, and embrace the trade of the future.
  • Jobs do not disappear; jobs become different. Politicians must tell people that if a robot takes their job, they must find something else to do (and help them with that). Technology does not cause deflation – technology changes relative prices, not inflation. Politicians challenging central bank independence at a time of quantitative policy is very dangerous

Updated

The sovereign bond market has also entered a state of temporary hibernation this morning, with the prices of benchmark US, UK and German debt virtually unchanged.

Jim Reid, strategist at Deutsche Bank, says few people wants to take a big risk ahead of tonight’s election results.

“When the numbers are as close as this and when we are seeing an antiestablishment movement that perhaps behaves differently to traditional election voters, then the outcome is more uncertain,

After three hours of trading, Europe’s stock markets are still gripped by nervous tension.

The FTSE 100 is currently up just 9 points, or 0.13%, as the City awaits results from America overnight.

Joshua Mahony, market analyst at IG, says:

The reality has hit home today, after yesterday’s carefree exuberance almost made us believe the election was already over. Today sees all other concerns thrown out the window as we hunker down for a historic night that will likely dictate market sentiment for the remainder of this year.

A handy map for those of you trying to plan your election coverage overnight (all timings for the UK)

A Trump victory could send the gold price surging to ,400 per ounce, up from around ,280 today, according to Citi analysts.

They also predict that the Mexican peso would slump by 10%, to 20 peso to the , on fears of trade disruption.

Analysts warn of market mayhem if Trump wins

U.S. Republican presidential nominee Donald Trump speaks at his final campaign event at the Devos Place in Grand Rapids, Michigan, earlier today.
Donald Trump speaking at his final campaign event at the Devos Place in Grand Rapids, Michigan, earlier today. Photograph: Rebecca Cook/Reuters

Several City firms are warning their clients to expect a heavy selloff on Wednesday, if Donald Trump beats Hillary Clinton.

Andreas Johnson, economist at Nordic bank SEB, warns that the race could be closer than people expect.

A Trump victory would be a clear risk off event that would trigger significant reactions and equity markets would take a sharp hit, at least in the short term. Emerging market assets look particularly vulnerable as safe haven flows would put pressure on assets perceived to risky.

A clear Clinton victory should trigger a short-lived rally.

“However, the tightening of the polls indicate that the risk of a very close result is substantial. In this scenario the election result could be up for challenge and equity markets could suffer from a prolonged period of uncertainty. The 2000 presidential election resulted in a month of uncertainty and such a scenario could weigh heavily on stock markets.”

Philip Smeaton, chief investment officer at Sanlam Private Wealth (UK), says Trump could disrupt global trade and rock the financial system:

“A Clinton win would put America in safe(r) hands, but much will depend on the individuals she appoints around her. If she does as expected and plays it safe in her choices, the markets will breathe a sigh of relief. Trump on the other hand, would be a wildcard president and one that few investors would welcome.

Trump’s policies would likely see a destabilised financial system and damaged international trade relationships. It’s not all doom and gloom though – Trump’s pro-business taxation policies may mitigate some of the damage done to the wider economy.

Caxton FX analyst Alexandra Russell-Oliver predicts that the US dollar could fall by up to 10% against the pound.

A 5%-10% drop in the value of the US dollar is entirely possible should Trump be elected on November 8th.

In terms of the bigger picture, the global implications of this swing in the market becomes a huge issue for countries with US dollar denominated debt in the emerging market amongst others. Should we be trading at 1.2500 just prior to the election, we could be seeing a trading range between 1.3100 and 1.3500 in the instant aftermath of the result.

However…there’s also a chance that panicky investors might pile into the US dollar in search of safety.

Updated

Toblerone in Brexit shrinkage shocker

If there’s one thing that agitates Britons more than the US presidential election, it’s a change to their favourite chocolate.

And there’s quite an outcry this morning, as people realise that Toblerone has cut the size of some of its bars, and hiked the prices too.

This follows fall in the pound since the EU referendum, and frankly the redesign looks like an Photoshopped vision of post-Brexit gloom:

Fans are venting their anger, with one claiming that it’s one of the “dumbest corporate decisions of all time”…..

Updated

Newsflash: British industrial output fell unexpectedly in September, but manufacturing managed a small revival.

The Office for National Statistics reports that industrial production shrank by 0.4%, due to a decline in mining and quarrying, and oil and gas extraction.

But encouragingly, manufacturing output rose by 0.6% during the month.

Senior ONS statistician Kate Davies says we shouldn’t draw any sweeping conclusions about Brexit, though:

“Manufacturing was broadly flat across the third quarter while oil and gas were weak overall, with widespread summer maintenance shutdowns hampering production more than usual.

“There are no obvious signs so far of either the weaker pound or post-referendum uncertainties affecting the output of UK factories, which continued broadly in line with recent trends.”

Today could be a pretty dull trading session in Europe, warns Connor Campbell of SpreadEx:

The morning session could be a bit of a duff one this Tuesday, given that nothing concrete from the US in terms state-voting etc is going to be out until this evening. It is likely going to be one of those days where the seismic nature of an event renders the market inert for around 24 hours.

The pound has risen 0.3% against the US dollar this morning, to .2424, recovering some of yesterday’s selloff.

But generally the currency markets are pretty calm.

BNY Mellon currency strategist Neil Mellor says:

“The markets are in lockdown mode at the moment.

There’s a little tentativeness ahead of the election even though polls are giving Clinton the lead.”

European markets eerily calm this morning

European stock markets are as flat as an American pancake in early trading (but nowhere near as delicious).

The FTSE 100 index has crept up just 3 points, having jumped by 113 points yesterday. The German and French markets are equally dull, while the Italian FTSE MIB has dipped a little.

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The main European Photograph: Thomson Reuters

Yesterday’s rally was driven by the news that the FBI had cleared Hillary Clinton over her email server, following a second probe. Now, investors are wondering if the polling are right – they give the Democratic nominee a three point lead nationally.

Michael Hewson of CMC Markets says that memories of the British EU referendum are still fresh:

With the finishing line now in sight financial markets are reacting as if a Clinton win is a done deal, in eerie echoes of the lead-up to the June UK Brexit vote, as markets priced in the preservation of some form of status quo, and we all know how that ended.

Financial traders are pretty confident that Hillary Clinton will win, according to spread-betting firm IG’s presidential barometer.

It shows that Clinton now has an 81% chance of success, based on IG clients’ trades:

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City experts are predicting a small rally if Clinton wins the presidency, and a whopping selloff if Trump triumphs.

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An American flag flies over Capitol Hill in Washington.
An American flag flies over Capitol Hill in Washington. Photograph: Susan Walsh/AP

Today isn’t just about the presidential race, of course. City investors are also watching Congressional elections, to see who wins control of Capitol Hill.

Analysts at RBC Capital Markets believe the Republicans will retain their grip on the lower house of Congress.

In terms of the Senate, Republicans are currently slightly edging out Democrats 51-49 in “no toss-ups” polling. But while the Presidency and Senate are seemingly too close to call, the House looks very likely to remain decidedly in Republican control—they are ahead 224 to the Democrats’ 190, not including the 21 toss-ups.

Thus, Republicans can achieve a majority of 218 seats without winning any of the toss-ups.

That would potentially make it rather harder for Hillary Clinton to push policies through, should she beat Donald Trump tonight.

The agenda: Clinton vs Trump looms over the markets

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

There’s only one event on everyone’s mind today, of course, the US presidential elections.

And global stock markets looks decidedly nervous this morning as America heads to the polls after one of the more vicious and occasionally unedifying campaigns.

Last night, the US stock market posted its best one-day jump since March, with the Dow Jones index rising by 2%.

But investors appears to be hunkering down today as they wait to see whether the polls are right, and Hillary Clinton beats Donald Trump to the White House.

European stock markets are looking becalmed right now, after a lacklustre day in Asia which saw Japan’s Nikkei dip 5 points, or 0.03%.

Investors can remember the shock of 24th June, when predictions that Britain would vote to remain in the EU came badly unstuck.

Mike van Dulken of Accendo Markets sums up the situation:

Asian markets have struggled for traction overnight, unable to build on Monday’s gains, with momentum fading. Memories of a surprise Brexit result are too fresh to ignore at this late stage and polls so tight.

Clinton has enjoyed an early success, claiming the (tiny) constituency of Dixville Notch by four votes to two!

But that won’t be enough — the election will be decided in key battlegrounds like Florida, Pennsylvania, Nevada, New Hampshire and Ohio. If Trump performs surprisingly well in those states, things could get very ‘interesting’.

We’re already liveblogging all the action from the US, here.

Also coming up today……

High street retailer Marks & Spencer has announced a store closure programme as CEO Steve Rowe tries to breath new life into the chain.

A looooong-awaited report into Royal Bank of Scotland has shown how the bank mistreated some small customers, following allegations that some were deliberately driven into bankrupcy. RBS is paying £400m compensation.

European finance ministers are holding an Ecofin meeting in Brussels this morning. They’ll be discussing plans to clamp down on corporate tax avoidance. Brexit isn’t on the agenda, but I guess it’ll be discussed in some quiet corners

And on the economic front, we’re getting new industrial production figures from Germany and the UK this morning.

And at 3pm, the NIESR thinktank will estimate how quickly the UK economy grew in the August-to-October quarter.

Updated

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