Global stocks rallied with commodities and Mexico’s peso on speculation Hillary Clinton’s chances of a U.S. election victory increased after the FBI said her handling of e-mails wasn’t a crime. Demand for haven assets waned, with high-quality government bonds, the yen and gold retreating.
The MSCI All Country World Index was set for its biggest gain since June, the Dow Jones Industrial Average climbed more than 300 points and European shares rebounded from a four-month low as Clinton is seen by investors as the more predictable candidate. The peso jumped the most in a month, and a rally in the dollar versus the yen showed prices close to fully reflecting a Democrat win. Oil and metals paced gains in materials, while gold sank with Treasuries.
Financial markets have been on edge since FBI director James Comey’s announcement on Oct. 28 that the bureau was looking into more Clinton e-mails from an unauthorized server. All the jitters with election polls showing a tighter presidential race spurred a flight to relatively safer assets last week. That came to a halt just before the Nov. 8 vote as Comey said his agency kept a July conclusion that it wouldn’t recommend criminal charges against Clinton.
“There’s a restrained global relief,” said Piet Lammens, head of research at KBC Bank NV in Brussels. “The market reacted to the message that they started the investigation and now they have to do the opposite. However, we are just one day before the election and it would be imprudent to take big positions and think everything is OK.”
Clinton is leading Republican Donald Trump by three percentage points among likely voters nationally, the latest sign that her campaign’s painstaking focus on women, Latinos and blacks could help propel her to the White House. The final Bloomberg Politics national poll before Tuesday’s election has the Democrat ahead of Trump, 44 percent to 41 percent, when third-party candidates are included. In a two-way contest, she’s also up by three points.
Speculation on Clinton’s chances helped boost odds of a Federal Reserve interest-rate hike next month. Data compiled by Bloomberg based on fed funds futures trading show an 82 percent probability of higher borrowing costs by year end, up from 76 percent on Friday.
While riskier assets are climbing, trading patterns around Britain’s referendum on European Union membership provide a cautionary tale. A similar rally in stocks, emerging markets and commodities on the day of the U.K. vote gave way to a slump -- and a rebound in haven assets -- after the unexpected decision in favor of Brexit. The outlier this time around is the dollar, which is strengthening, having weakened before Britain’s plebiscite.
Stocks
MSCI’s global gauge climbed 1.5 percent at 1:48 p.m. in New York, heading toward the biggest advance since June 29.
The S&P 500 Index rallied 2.1 percent to 2,128.36, erasing its November losses. The Dow Average increased 340.95 points. The measure of market turbulence known as the VIX slid 17 percent after surging 39 percent last week. JPMorgan Chase & Co. and Microsoft Corp. advanced more than 2.8 percent, while Biogen Inc. led gains in health-care stocks.