LONDON, (Pakistan Point News - 07th Nov, 2016 ) - Global equities rebounded sharply Monday, the eve of the US presidential election, after the FBI handed market favourite Hillary Clinton a major boost by ruling out criminal charges. Asian and European equities surged higher as traders breathed a sigh of relief as FBI chief James Comey said Democratic nominee Clinton would not face charges over her use of a private email server, dealing a setback to her Republican rival Donald Trump.
In European deals, Frankfurt and Paris both gained 1.7 percent, while London added 1.3 percent. Wall Street was up 1.5 percent in early New York business. "The timing of FBI director James Comey's disclosure has once again dealt a serious blow to Donald Trump's chances of securing the White House, something the markets have responded very positively to," said Oanda analyst Craig Erlam. Markets were plunged into turmoil on October 28 when Comey revealed that messages linked to Clinton were being investigated, sending Trump surging in opinion polls just days before the November 8 vote.
However, Comey on Sunday announced he would not change his July recommendation that Clinton not be prosecuted for allegedly putting US secrets at risk. Investors became more willing Monday to hold assets that are deemed to carry a higher risk -- like equities. "The dark clouds seem to be dissipating on news that FBI sent a letter to Congress citing that Hillary Clinton had not committed a crime with her private server," said London Capital Group analyst Ipek Ozkardeskaya.
"The FBI news triggered a risk rally across the global financial markets." - 'Risky assumption' - ====================== But Fawad Razaqzada, market analyst at forex.com, warned that it was a "risky assumption" to believe that Clinton will win just because she is in the clear with the FBI. "The opinion polls are still very tight and a lot of people will have made up their minds already, regardless of the FBI probe. So a win for Donald Trump is still a big risk which may be under-priced," he said.
Former secretary of state Clinton is considered by many investors to be a safer bet than Trump, who is seen as a loose cannon with policies many fear could wreck the world's top economy. "The US election is all that matters," Ozkardeskaya added. "The outcome of the US presidential election is important for the global markets, as the new US president will set the tone for the world's most powerful economy's external politics and trade relations for the next four years.
"In this context, the Republican Party nominee Donald Trump's victory could be expected to hit the business sentiment across the global markets, hence is defined as a major, world-wide risk from a market perspective heading into Tuesday's election." The Mexican peso -- which has taken on an inverse relationship with Trump's presidential prospects -- staged a stunning rally against the dollar to recoup all its losses from last week. The Currency is considered a reflection of Trump's chances because of his anti-Mexican rhetoric -- including his pledge to remove undocumented migrants, build a border wall and tear up a trade deal.
Also illustrating fears for global trade in the event of a Trump victory, Sweden's krona fell Monday, reflecting the vulnerability of the Scandinavian country's open economy to trade restrictions, dealers said. The krona dropped to a six-year low against the euro, hitting 0.10 Euros per krona.