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European and Asian stocks dropped on Monday as the US presidential election race took a dramatic late twist. Markets moved cautiously as news that the FBI would further probe Hillary Clinton’s emails fueled fresh uncertainty about the outcome of the US presidential election only eight days before the vote. Traders globally had broadly expected Democratic candidate and Wall Street favourite Clinton to sweep to victory, with her rival Donald Trump considered a loose cannon.
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But FBI chief James Comey’s announcement that the bureau was again looking at her use of a private email server while secretary of state sent shudders through trading floors, with US stocks tumbling Friday — and the dollar taking a brief hit. It was “the idea of a Trump presidency that was spooking markets on Monday”, said CMC Markets analyst Jasper Lawler. “Stocks in Europe are feeling the aftershock of US election jitters that struck US markets on Friday when the FBI opened up a new probe into Hillary Clinton’s emails.”
Wall Street’s sell-off Friday filtered through to Asia on Monday, where dealers were nervously awaiting also a series of key events this week, including central bank policy meetings in Japan and the US and the release of US jobs figures Friday. In Europe, the Bank of England delivers its latest monetary policy decisions Thursday alongside updated growth and inflation forecasts amid Brexit uncertainty and clouds over the future of BoE governor Mark Carney.
Media speculation over the weekend was divided on the fate of Canadian national Carney, with competing claims as to whether he was set to announce his departure. “Pro-Brexit politicians have accused the governor of interference, but are now, somewhat ironically, interfering themselves in their calls for Mr Carney to either go or stick narrowly to his brief,” said Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor.
“This increased political interference is unhelpful and pushes against the boundaries of the Bank of England’s independence.” She added: “Sterling has fallen over five percent against the dollar in October, but the possibility that Mark Carney could decide to leave his post early would almost certainly exacerbate the pressure on the pound.”
The dollar meanwhile has held most gains against the Mexican peso. Trump has promised to tear up a trade deal between the two countries and build a wall on their border. Elsewhere, today, oil prices also fell — dragging energy firms lower — following OPEC’s failure last week to hammer out details of an agreement to cut output and ease a supply glut.