Market moves this week reflect a pretty sizeable shift in sentiment and a realisation that this year’s US presidential race is far from over.

A poll from ABC that gave Trump a slender lead over Clinton was the catalyst for some fairly significant risk-off moves.

Given how far ahead Clinton was pretty recently, the fact that we’re talking about a close race again is clearly rattling investors.

Gold

 

Gold has rallied sharply, gaining one per cent as investors hedge their positions and use the metal as a safe haven against equity market shocks should the market have got it wrong. On Wednesday (November 2nd), gold was approaching the key psychological level of $1,300, a month high. Silver has also jumped.

Oil is down, further impacting sentiment. Doubts about where OPEC and Russia will agree a production cut come the end of the month is the source of selling in what’s still an oversupplied market.

Gold_Nov2

Equities

 

The VIX – the so-called fear gauge that measures US equity market volatility –jumped to 19, having languished around the 13 level for some time lately as markets thought Clinton was a shoo-in.

The rise in volatility corresponds with a sell-off on the S&P 500, which has just broken some fairly important support levels to trade at its lowest level since July. Markets are clearly worried about a Trump win, or at investors are de-risking to protect against major shocks and volatility around the vote.

SP500_Nov2

The S&P 500 closed Tuesday just above the 2100 handle, a low not seen since early July. The fact that the S&P 500 closed out October below its August 1st opening price is also being taken as a strong signal that Trump should not be written off. In almost every election year since 1944 this has signified a win for the challenger party – in this case Trump.

European equities have also dipped, with the Stoxx 600 gauge at its lowest since July.

Forex

 

Meanwhile, the Mexican peso, which is now the chief proxy trade for the US election, has dropped after the poll, extending losses after last week’s FBI-email investigation bombshell rocked support for Clinton. USDMXN is trading well above 19, a month low for the peso.

USDMXN_Nov2

The US dollar has also been sold off, losing ground against the safe haven Japanese yen and Swiss franc.