Key global markets are enjoying a “relief rally” after the US presidential debate

Published September 27, 2016 by lagmen
A sales assistant watches the TV broadcast of the first presidential debate between U.S. Democratic presidential candidate Hillary Clinton and Republican presidential nominee Donald Trump, in Seoul, South Korea, September 27, 2016.The general consensus is that Hillary Clinton bested Donald Trump in the first US presidential debate last night (Sept. 26). The markets that are rising in early trading today reinforce that view.

As the debate took place, some markets moved immediately. The Mexican peso, which has moved inversely with Trump’s chance of winning presidency during the campaign, jumped by 2% against the dollar not long after the debate began, its biggest gain in months.

Trump has pledged to build a wall along the Mexican border and thinks that NAFTA has been a “disaster.” As a result, the Canadian dollar also rallied after Clinton appeared to take the upper hand in the debate with Trump, but not by as much as the peso.

It’s been “very much a relief rally in risk assets” on the day after the debate, Sean Callow, a currency strategist at Westpac in Sydney, told Bloomberg. Safe-haven assets like gold, the Japanese yen, and US treasuries, by contrast, have lost ground. Gold, which generally rises when investors are fearful of economic growth prospects, skidded downwards during the debate.

Asian investors were preparing for a sell-off if Trump got an edge in the debate, as Quartz reported earlier. Trump’s comments about slapping steep duties on Chinese imports, and generally dim view of America’s trade relationships, are of particular concern to export-dependent economies across Asia. After the debate, key benchmark stock indexes in the region mostly gained ground.

 

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