Stocks Up as Nervous Markets Wager on Clinton Winning

Asian stocks rose on Tuesday as world markets braced for the outcome of one of the most contentious U.S. presidential elections in history, with most investors cautiously optimistic of a win by Democrat Hillary Clinton.

European markets are set to begin the session little changed, with financial spreadbetter CMC Markets expecting Britain’s FTSE 100 and France’s CAC 40 to open flat and Germany’s DAX to start the day up 0.1 percent.

The Mexican peso, which strengthened as the perceived chances of an election victory by Republican Donald Trump has ebbed, retained its solid gains from Monday.

“As markets head into the U.S. election, a final recalibration of risk is in train,” Michael McCarthy, chief market strategist at CMC Markets in Sydney, wrote in a note.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.4 percent. But Japan’s Nikkei surrendered earlier gains to close flat, as the yen rose following Monday’s losses.

The dollar, which also advanced on Monday, edged slightly lower.

Clinton’s chances of winning got a boost on Sunday when the U.S. Federal Bureau of Investigation said it stood by its July finding that the Democratic candidate was not guilty of criminal wrongdoing in her use of a private email server.

That came after the FBI announced on Oct. 28 it was reviewing additional emails relating to the server while Clinton was secretary of state, triggering a selloff in global markets.

Clinton is seen by investors as offering greater certainty and stability, and, until last week’s stumble, had been seen as the likely victor in Tuesday’s presidential vote.

While polls last week showed Trump closing in on Clinton’s lead, at least five major polls on Monday showed Clinton still ahead.

But investors remained wary, noting Britain’s shock vote in June to leave the European Union had defied most polls and bookmakers’ odds.

The election “is the largest ‘known unknown’ markets have had to contend with since the global financial crisis,” even more than Brexit, Mixo Das, Asia equity strategist at Nomura, wrote in a note. “The higher likelihood there is still that Clinton prevails. Her slide in polling numbers appears to be stabilizing… and reports about a surge in early voting over the weekend are positive for her.”

In Hong Kong, the Hang Seng index ticked up 0.3 percent.

China’s CSI 300 index index added 0.4 percent, with relief over improving prospects of a Clinton win offsetting bigger-than-expected declines in both imports and exports and a smaller-than-forecast trade balance in October.

The MSCI World index advanced 0.1 percent, adding to Monday’s 1.6 percent gain, its biggest single-day jump in almost 19 weeks.

On Wall Street overnight, the S&P 500 and the Dow Jones Industrial Average soared 2.1 and 2.2 percent respectively, recording their biggest one-day percentage gain since March 1.

The dollar, which recorded its biggest one-day increase against the yen in almost four months on Monday, surrendered 0.1 percent to trade at 104.35 yen on Tuesday.

The U.S. currency was little changed versus the Mexican peso at 18.5855, after sliding 2.3 percent on Monday, its biggest one-day drop in six weeks.

The Mexican currency is seen as a proxy for bets on the U.S. election because Mexico is considered most vulnerable to Trump’s trade policies as 80 percent of its exports go to the United States.

The euro, which retreated 0.9 percent on Monday, was flat at $1.10435.

Crude oil futures were mixed as concerns about the stronger dollar and doubts over OPEC’s planned production cuts ate into the broad revival in risk appetite.

U.S. crude slipped 0.1 percent to $44.87 a barrel, after advancing 1.9 percent on Monday. Global benchmark Brent rose 0.2 percent to $46.25, extending Monday’s 1.3 percent jump.

As some caution returned after Monday’s exuberance, gold climbed 0.1 percent to $1,283 an ounce, erasing some of its 1.7 percent loss from the previous session.