Mexican Peso Gains With Europe, U.S. Stock Futures

Mexico’s peso gained with European and U.S. stock index futures after the Federal Bureau of Investigation said it maintains the view that Hillary Clinton’s handling of her e-mails wasn’t a crime. The yen and Swiss franc retreated with gold.

Mexico’s currency, which has tended to strengthen on signs Republican presidential candidate Donald Trump’s campaign is faltering, was set for its biggest jump since September and Asian equities rebounded from a seven-week low ahead of Tuesday’s U.S. presidential election. The yen sank by the most in two months, U.S. Treasuries fell and gold dropped for the first time in eight days as investors shunned haven assets. Hong Kong’s property developers tumbled after the government stepped up efforts to cool the housing market, while nickel led a rally among industrial metals.

The FBI is sticking with its view that Clinton’s handling of e-mails during her tenure as secretary of state wasn’t a crime, after reviewing new communications potentially related to the Democratic candidate, director James Comey said Sunday in a letter to Congress. Comey’s announcement just over a week earlier that the bureau was looking into more e-mails sparked a selloff in risk assets, with U.S. stocks capping their longest run of losses since 1980. The peso’s fortunes have been tied to Trump’s campaign given his pledge to renegotiate trade deals with Mexico and to build a wall along the U.S. border.

“The market is viewing the latest Hillary Clinton news as a positive, at least in the short term,” said Richard Sichel, chief investment officer at Philadelphia Trust Co., which oversees $2 billion. “It may still be a close call in the end, but the market for the time being is acting as if some of the uncertainty is gone.”

Currencies

The peso climbed 2.1 percent versus the dollar as of 7:05 a.m. London time. The currency fell in each of the last two weeks as Clinton’s lead over Trump narrowed in opinion polls amid the FBI’s renewed probe of her emails, an issue that has dogged her campaign.

The Bloomberg Dollar Spot Index rose for the first time in seven days on optimism the FBI’s latest statement will make a Clinton presidency more likely and pave the way for the Federal Reserve to raise interest rates in December. Trump has advocated winding back free-trade agreements, which may hinder global economic growth and make the central bank less inclined to tighten policy.

“A Clinton win would clear the decks for the Fed to raise rates in December and for markets to price in a more aggressive profile for tightening over 2017,” said Sean Callow, a senior strategist at Westpac Banking Corp. in Sydney. “The surge in U.S. equity futures and slide in the gold price reinforces the evidence that a Trump win is seen as negative for global growth and profits.”

The yen and the franc both weakened more than 0.9 percent, after the two haven currencies posted gains of more than 1.5 percent last week.

China’s yuan fell by 0.3 percent, the biggest loss in four weeks, after the central bank lowered its daily reference rate ahead of an update on the nation’s foreign-exchange reserves. The holdings are expected to have dropped by $34 billion to $3.13 trillion in October, according to the median forecast in a Bloomberg survey.

Stocks

Futures on the Euro Stoxx 50 Index climbed 1.4 percent. Euro-area finance ministers meet Monday to discuss banking union and Greece’s second bailout and European Central Bank Vice President Vitor Constancio may touch on monetary policy in a speech.

S&P 500 Index futures rallied 1.3 percent following a nine-day slide in the underlying benchmark. The CBOE S&P 500 Volatility Index, a gauge of expected swings in U.S. stocks, soared 39 percent last week as Clinton’s lead was cut. While the race has tightened, the Democratic nominee maintains a 2.2 percentage-point lead over Trump, according to an average of polls by RealClearPolitics.

“All that drama and yet the FBI director is sticking to the same conclusion that they had in July with respect to Hillary Clinton’s e-mail,” said Naeem Aslam, chief market analyst at Think Markets U.K. Ltd. in London. “This is good news for investors who have an appetite for risk in this environment.”

The MSCI Asia Pacific Index added 0.5 percent, after sliding 1.4 percent last week. Japan’s Topix index gained 1.2 percent, recovering from its biggest weekly loss since July, as the yen’s retreat gave a boost to the nation’s exporters. New Zealand’s benchmark stock gauge jumped by the most in five years.

Westpac Banking Corp. led gains among Australian banks after reporting earnings and HSBC Holdings Plc rallied by the most in two months in Hong Kong following its results. Suzuki Motor Corp. had its biggest jump since February after announcing a profit that beat analysts’ estimates.

The Hang Seng Property Index of property shares was headed for its biggest loss since January after the government raised stamp duty on home purchases, meaning foreign buyers will now pay an effective 30 percent. Cheung Kong Property Holdings Ltd. and Sun Hung Kai Properties Ltd. tumbled more than 8 percent.

Commodities

Gold fell as much as 1.3 percent to $1,288.11 an ounce. It surged 2.3 percent last week amid concern Republican Donald Trump may capture the White House, with Citigroup Inc. predicting a rally to $1,400 if he were to win. Adding to the headwinds for bullion, U.S. employment data on Friday bolstered the case for higher borrowing costs and Fed Bank of Atlanta President Dennis Lockhart signaled a December rate hike was likely.

Nickel surged by the most four months in London after violent protests in Jakarta on Friday spurred concern that Indonesian supplies could be affected if the unrest spreads. Copper advanced to its highest level since March.

“General bullish sentiment is driving up metals prices,” Wang Cong, an analyst with SMM Information & Technology Co., said from Shanghai. “It seems that Clinton’s now more likely to win the presidency. The protests in Indonesia have raised concerns about possible supply disruptions for ferronickel.”

Crude oil rose 1.6 percent to $44.78 a barrel in New York after Algeria’s energy minister said he remains confident the Organization of Petroleum Exporting Countries will set output quotas at its next meeting to manage production.

Bonds

The yield on U.S. Treasuries due in a decade increased by four percentage points to 1.82 percent as Clinton’s improved election prospects were seen boosting the likelihood of a Fed rate hike next month.

If Clinton wins, “interest rates are likely to head higher as the market looks towards Fed normalization,” said Eugene Leow, a fixed-income strategist at DBS Group Holdings Ltd. in Singapore. “Conversely, sentiment is likely to deteriorate further if Trump wins. We suspect that the knee-jerk reaction lower in yields would be comparable to what was seen in the immediate aftermath of Brexit.”

Source:Bloomberg