Hong Kong: Asian equities tumbled on Wednesday, extending a global sell-off, and the Mexican peso fell after a poll showed Donald Trump overtaking market favourite Hillary Clinton in the race for the White House.
With Clinton until last week comfortably ahead, traders were upbeat about her chances of winning on November 8 but news on Friday that the FBI were again looking at her e-mails has raised the prospect of Trump becoming president.
Trump is viewed as a wildcard, in part because of his harsh criticism of Federal Reserve Chief Janet Yellen and international trade pacts.
“Since the FBI reopened its case into Hillary Clinton’s e-mails last Friday, her substantial lead in the polls has been decimated and some now even show Trump in the lead,” Craig Erlam, a senior market analyst at OANDA, said in a note.
“It’s been clear for some time now that markets would much prefer the stability that a Clinton victory would bring for the US economy and the reaction over the last 24 hours or so since the polls started to change so dramatically just confirms this. Trump risk is well and truly being priced in again.”
The news battered markets on Wall Street and in Europe, while the VIX volatility index, which is seen as a measure of the US market’s fears, was sitting near levels last seen after Britain voted in June to leave the EU.
Those losses filtered through to Asia, where Tokyo closed 1.8 per cent lower, while Shanghai ended down 0.6 per cent.
Sydney and Seoul each sank more than one per cent and there were also sharp losses in Wellington, Manila and Taipei.
Hong Kong shares ended at their lowest in more than two months on Wednesday, joining a global sell-off in risk assets amid uncertainty over the US presidential election next week.
Also damping sentiment was a slump in financial heavyweight Standard Chartered following the lender’s confirmation of a Hong Kong investigation, and a tumble in energy shares as oil prices hit a one-month low.
The benchmark Hang Seng index fell 1.5 per cent, to 22,810.50, while the China Enterprises Index lost 1.9 per cent, to 9,519.87 points.
European shares fell in early deals on Wednesday, set for their eighth day of straight losses, with sentiment hit by jitters ahead of the US presidential election next week and a fall in AP Moller-Maersk after results.
The STOXX 600 index dropped 0.8 per cent, hitting its lowest level since July 11, with all sectors in negative territory. Wall Street and Asian shares fell after polls showed that Republican Donald Trump was closing the gap on Democrat Hillary Clinton in the US presidential race ahead of next Tuesday’s vote.
Banking stocks were the top sectoral fallers, down 2.1 per cent and extending their losses from the previous session, with Italian lender Banco Populare and Danske Bank among the biggest decliners.
Shares in Banca Monte dei Paschi di Siena fell 6 per cent in early trade, triggering an automatic trading suspension, after the withdrawal of an alternative rescue plan for Italy’s third-largest lender.
Shares in container shipping firm AP Moller-Maersk slumped more than 7 per cent after the firm’s earnings missed forecasts with a 44 per cent fall in third-quarter profit.
Currency traders also took fright, fleeing into the safe-haven yen. The greenback fell to 103.86 yen in Tokyo, down from 104.12 yen in New York and well off the levels of above 105 yen seen on Tuesday.
Analysts say a Trump win could also lead the Federal Reserve — which ends a policy meeting on Wednesday — to put off an expected December interest rate hike owing to worries about his effect on the economy.
“Even if the Fed does signal an inclination to lift rates in December, markets will take the view that this is unlikely if a Trump victory leads to uncertainty and a surge in financial-market volatility,” Ric Spooner, Chief Market Analyst in Sydney at CMC Markets, said in an e-mail to clients, according to Bloomberg News.
However, the dollar was sharply up at 19.32 Mexican pesos from 18.85 pesos on Tuesday. The peso is considered a proxy for Trump’s chances owing to his anti-Mexican rhetoric throughout the campaign including his pledge to remove undocumented migrants, build a wall and tear up a trade deal. — AFP
The greenback also rallied against higher-yielding, risker Asia-Pacific units, soaring 0.9 per cent against the South Korean won and 0.5 per cent versus the Australian dollar.
A week-long retreat in oil prices also extended in Asia, with both contracts down almost a tenth from recent highs as investors grow worried about the chances of success for OPEC’s September agreement to cut output.