The big news driving markets this morning is that FBI director James Comey has taken an 11th hour decision to clear Democrat nominee Hillary Clinton of any crime related to her use of a private e-mail server. The markets have reacted positively to this development with stocks around the globe rallying alongside the US dollar, whilst perceived safe-haven assets such as gold have seen substantial declines.
US elections remain the driving force
The latest twists and turns in the race for the White House continue to be the single biggest determinant in moving the markets, with UK stocks reacting positively to the latest developments. A victory for Mrs. Clinton is seen by many as preferable for equities as she would represent a continuation of the status quo and her only realistic challenger in Republican Donald Trump is widely perceived as a potentially volatile and unpredictable leader.
Whilst the news that the investigation into whether her misconduct with regards emails has shown no legal wrongdoings, it may be a case of the damage already being done. When the news broke on the 28th of last month, it was met promptly by a decline in the polls for Mrs. Clinton and despite her being found ultimately innocent this could prove to be little more than a last-minute boost rather than a game changer in the election outcome.
Nonetheless, the moves seen in the markets today are consistent with what has been widely predicted in the event of a win for Clinton and even though she has lost ground in recent weeks many believe she is still the favourite to prevail when Americans go to the polls tomorrow.
Mining stocks lead the risers
The FTSE100 has enjoyed a bullish start to the week with the index moving higher by almost 90 points on the back of a rise in risk-on sentiment coming from across the Atlantic. BHP Billiton (LON:BLT), Glencore (LON:GLEN) and Rio Tinto (LON:RIO) are all on course for strong gains as the mining sector has reacted positively to the latest twist in the US presidential election. Asian stock markets rose strongly overnight in a sign that the FBI exoneration of Hillary Clinton is seen as positive for equities. HSBC stock is up by just shy of 5% despite the bank reporting an 86% fall in profits for the third-quarter.
The decline in the bottom line was largely due to the booking of a substantial loss of $1.7bn on the sale of its Brazilian unit, however investors have reacted positively to the release and possibly viewed it as a final low before a recovery ahead. With the benchmark as a whole firmly in the green there aren’t many significant fallers on the UK blue chip index, with only Tesco (LON:TSCO) shares lower by more than 1%.