Stocks, Peso Down. Yen and Gold Rally

A global equities selloff deepened and Mexico’s peso weakened as polls indicated a tightening race ahead of next week’s American presidential election. The yen gained with the Swiss franc and gold as investors favoured haven assets.

The MSCI All Country World Index sank to its lowest since July as shares slumped in Europe and Asia with futures foreshadowing a seventh day of losses for US equities. The yen rose for a second day, while the Swiss franc and gold were near their highest levels in almost a month. Political upheaval weighed on South Korea’s currency, and New Zealand’s dollar strengthened after jobs data. Treasuries rose ahead of a Federal Reserve policy decision and crude oil fell after a report showed American stockpiles expanded.

An ABC News/Washington Post tracking poll on Tuesday showed Republican Donald Trump with 46% support to Democrat Hillary Clinton’s 45%, putting him ahead for the first time since May. Poll aggregator FiveThirtyEight estimates that the chance of a Clinton victory has fallen by about 10 percentage points in the past week to 72% and a Bank of America Corp. index tracking volatility expectations in equities, bonds, currencies and commodities rose for five days through Monday, the longest run of increases since before the British vote to quit the European Union.

“The markets’ anxiety levels have moved up a gear,” said Chris Weston, Melbourne-based chief market strategist at IG Ltd. This “suggests the bears have the upper hand, with the buying drying up and funds keeping their cash deployed for more certain times,” he said.

While the Fed is expected to leave interest rates unchanged when a two-day meeting concludes Wednesday, futures indicate a 68% chance of a rate hike by year-end and investors will be on the lookout for any hints the authority may give regarding the policy outlook. Bloomberg’s dollar index fell for a fourth day as some analysts said a Trump victory could spur volatility in financial markets and reduce the odds of a rate increase next month.

Stocks

The Stoxx Europe 600 Index slid 0.7% as of 8:11 a.m. London time, falling for an eighth day ahead of the release of manufacturing data for the euro area. A.P. Moller-Maersk A/S tumbled by the most since June after the owner of the world’s largest container line reported a 43% drop in third-quarter profit.

The MSCI Asia Pacific Index fell by the most since September, with Japanese shares retreating from a six-month high before the nation’s financial markets shut Thursday for a holiday. Sony Corp. sank to a two-month low after the Japanese electronics maker’s quarterly profit missed estimates and Sumitomo Electric Industries Ltd. tumbled 12% after the company lowered its full-year earnings target.

“The Trump risk is in revival,” said Chihiro Ohta, a Tokyo-based senior strategist at SMBC Nikko Securities Inc. “With Trump, there always follows an uneasiness over whether policies will be managed properly in the US, and given the holiday tomorrow in Japan, there’s no need to build positions at an uncertain time like this.”

Futures on the S&P 500 Index fell 0.3% ahead of the Fed decision and results from companies including Alibaba Group Holding Ltd. and Facebook Inc.

Currencies

The yen climbed 0.5% against the dollar, after surging 0.6% in the last session. The franc also added 0.5% following a 1.4% jump that marked its biggest gain in about five months. Against the euro, Switzerland’s currency was headed for its strongest close in more than a year.

Mexico’s peso slid as much as 0.8% versus the greenback to its weakest level since Oct. 7. The currency tends to lose ground when support builds for Trump, who has said he would revisit the North American Free Trade Agreement that governs commerce between the US and Mexico. The Republican candidate’s prospects have improved since it was announced Friday that the Federal Bureau of Investigation had reopened a probe of Clinton’s use of private e-mail while Secretary of State.

Before the FBI announcement, “the market had pretty much priced out most of the risk of Donald Trump becoming president,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “Obviously, the markets had to reassess that view now.”

The won dropped as much as 1.1% to its weakest level since July as South Korean President Park Geun-hye replaced her prime minister and finance chief on Wednesday to help stem the fallout from a political scandal that threatens her grip on power.

The Kiwi gained 0.8% after New Zealand’s jobless rate unexpectedly fell to the lowest level since 2008. A tightening labour market could help Reserve Bank of New Zealand Governor Graeme Wheeler lift inflation back to the middle of his 1-3% target band, negating the need for further policy easing.

Commodities

Crude oil fell 0.7% to a one-month low in New York after industry data showed American inventories increased by 9.3 million barrels last week. Organization of Petroleum Exporting Countries members Libya and Nigeria are boosting output, providing a challenge to the group’s effort to finalize an agreement to curb production and stabilize prices.

Gold added 0.5%, after surging 0.9% on Tuesday. The Bloomberg Industrial Metals Subindex fell for the first time in eight days, as zinc retreated from a five-year high in London and aluminium slid from its highest close since June 2015.

“We’re in a bit of a risk-off mode again as markets readjust to the chances of a Trump presidency,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “The outlook for the global economy is still fragile and hits to sentiment can have an immediate, negative effect across the markets, and that includes the base metals.”

Bonds

Safe-haven demand boosted sovereign bonds, with 10-year yields falling across most of the developed world. The yield on US Treasuries due in a decade fell two basis points to 1.81%, after touching a five-month high of 1.88% in the last session. It’s unlikely the rate will climb too far past 2% anytime soon given how the American economy is performing, according to Jim Caron at Morgan Stanley Investment Management, which oversees $406 billion.

“Nobody really believes that rates can just rise very very quickly, or that bond prices can fall off a cliff,” Caron, who is based in New York, said Tuesday on Bloomberg Television. “You’re not seeing the growth. You’re not really seeing the inflation.”

New Zealand’s 10-year bond yield increased by three basis points to 2.77%. While investors are almost certain the central bank will cut its benchmark interest rate to a record-low 1.75% at a policy meeting next week, swaps prices indicate that the chance of a further reduction by the end of 2017 has dropped to about 11%, from 36% a month ago.