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Donald Trump's poor debate performance leads to market bounce

Hillary Clinton’s performance wins over forex and stock markets

Harry Cockburn
Tuesday 27 September 2016 04:11 EDT
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A man watches the US presidential debate in a shop in Korea. The country's Kospi index surged as Hillary Clinton was seen to triumph
A man watches the US presidential debate in a shop in Korea. The country's Kospi index surged as Hillary Clinton was seen to triumph (Reuters)

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Supporters of Donald Trump swamped online polls declaring victory after last night’s televised presidential debate, but it was Hillary Clinton who managed to convince the markets she was victorious.

The head to head battle triggered significant moves in the Mexican Peso, the Japanese Yen and the Canadian dollar, as currency traders bought and sold against the perceived failures and successes of the candidates.

By the end of the debate, the Mexican Peso had surged for the first time after weeks of stagnation as Mr Trump had been seen to close the gap in the polls.

A similar picture emerged in Canada, where Mr Trump’s incessant attacks on the North American Free Trade Agreement (Nafta), is seen as a threat.

The confidence in America’s two bordering neighbours has been interpreted as a victory for Ms Clinton who is seen as less of a risk than her opponent.

In contrast, the Japanese Yen saw a series of falls as the debate in New York unfolded. The Yen is seen as a safe haven currency in times of global uncertainty.

The First US Presidential Debate - in 90 seconds

“Every time Trump looked too emotional, the Canadian dollar went up against the yen. When Trump shouted, the yen fell,” Nomura FX strategist Yunosuke Ikeda told the FT.

Meanwhile, stocks in Asia surged as Clinton gained the upper hand. Japan’s Nikkei index rose 0.3 per cent, after having traded 1.6 per cent lower ahead of the debates.

Hong Kong’s Hang Seng index gained 1.1 per cent after opening flat, and Korea’s Kospi rose by 0.7 per cent as Mr Trump was seen to get into difficulties.

“The market liked the idea of a higher degree of certainty from her policies. Some of Trump's more radical policies involved having control of Congress, which seems unlikely now and the market is sensing some relief,” Chris Weston, chief market strategist at IG Markets told the Wall Street Journal.

The presidential debate – the most watched in US history with an estimated 100 million viewers – may have changed little on the ground, with both camps claiming victory, but it gave the markets some respite from the prospect of a victory for Mr Trump and the fiscal uncertainty that outcome is expected to unleash.

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