Markets up as Hillary Clinton takes big lead over Donald Trump
Trading in stocks and currency markets were volatile yesterday as the ECB met in Frankfurt but the US debate helped lift stocks as US commentators said there was a growing probability that Hillary Clinton could win the race by a big margin in the November 8 election.
“Despite the continued WikiLeaks releases of Hilary Clinton’s staff emails, it seems there is an overwhelming consensus that she will win by a wide margin next month.
"With the IG Presidential Binary currently pricing a Clinton victory at 85%, there is no surprise that we are seeing riskier assets such as equities come back into favour,” said Joshua Mahony, market analyst at online trading company IG.
Fivethirtyeight.com, a US website which involves leading election pundit Nate Silver, has ascribed a probability of 13.7% to Mr Trump winning the White House.
At the ECB meeting in Frankfurt, Mr Draghi signalled the bank probably won’t stop its quantitative-easing programme without tapering it first, indicating that the stimulus is likely to run past the currently scheduled end-date of March 2017.
“An abrupt ending to bond purchases, I think, is unlikely,” the ECB president said in a press conference.
A sudden stop “is not present in anybody’s mind,” he said. The comments keep the central bank on track for a potential extension of its bond-buying programme, as predicted by economists.
Mr Draghi said the governing council didn’t discuss prolonging or tapering in this policy meeting, while noting that the publication of fresh economic forecasts in December, as well as the results of internal studies on options to avoid running into bond shortages, will help the decision then.
“He really wanted to shut down any suggestion that the ECB is going to taper anytime soon, but he what he actually did was to tell people to come back in December and see what the ECB thinks then,” said James Athey, a money manager at Aberdeen Asset Management in London.
“That will leave enough unanswered questions to keep bond markets volatile. An already nervous market will not take much comfort from his obfuscation today,” Athey said.
Almost all European markets climbed, led by a surge in lenders, on Draghi’s comments. A gauge of banks in the eurozone climbed for a fifth day, its longest streak in more than two months.
Banks have suffered the most since quantitative easing began last year on concerns their profitability would be hit by a low-yield environment.
Even as they have been among the biggest gainers since the June low that followed the UK’s decision to leave the EU, they remain the year’s biggest decliners.
Analysts expect earnings at lenders in the gauge will tumble 22% this year, compared with a 4.5% contraction for Stoxx 600 members.
The Stoxx Europe 600 Index has lost almost 5.8% this year.
And a Bank of America report last week showed that fund managers have withdrawn money from the region’s stock funds for a record 36 straight weeks.
