Global stocks slumped to the lowest since July and bonds climbed with gold as investors crowded into haven assets after the latest U.S. election polls suggested a tighter race. Oil tumbled.
American equities were set for the longest slide since 2011 and European shares dropped for an eighth day. All the anxiety sent investors to the relative safety of the Japanese yen, the Swiss franc and gold, while extending a rout in Mexico's peso — which is seen as a barometer for market perception on the U.S. vote.
(More: Boldly betting oil will top out at $50 a barrel)
Treasuries rose before the Federal Reserve's policy decision on Wednesday. Oil sank after a record increase in U.S. inventories.
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A gauge of expectations for market volatility surged more than 50% in six days as U.S. Democratic contender
Hillary Clinton has seen her odds of a victory falter after the FBI reopened a probe into an e-mail server. An ABC News/Washington Post tracking poll on Tuesday showed her rival
Donald Trump ahead for the first time since May. In an open letter, economists including some Nobel laureates warned the Republican is “a dangerous, destructive choice” as he “promotes magical thinking and conspiracy theories.”
“Trump's victory could lead to volatility, flight to safety and selloffs in stocks,” said Soeren Moerch, head of fixed-income trading at Danske Bank A/S in Copenhagen. “We still think Clinton will win, and it will be business as usual, but it has become a very tight race.”
Ms. Clinton holds a slim advantage with independents, with almost half the voters in the crucial bloc saying renewed scrutiny of her e-mail won't impact their vote. Likely voters who don't identify with either party represented 29% of the electorate in the last presidential election and now back Ms. Clinton over Mr. Trump 39% to 35% in a head-to-head contest, the latest Purple Slice online poll for Bloomberg Politics shows.
STOCKS
The MSCI All Country World Index of shares slipped 0.5% as of 12:13 p.m. in New York, set for the lowest close since July 11. The S&P 500 Index fell 0.3% to 2105.83, dropping for a seventh straight day. The Stoxx Europe 600 Index posted its longest slide in two years. The MSCI Emerging Markets Index slipped 1.2%.
“The market's just sort of on the defensive with the uncertainties of the election and uncertainties of the Fed raising interest rates,” said Terry Morris, manager director of equities at BB&T Institutional Investment Advisors in Wyomissing, Pa.
Equity investors have stepped up trading in options that protect against a market decline. Since Oct. 24, open interest on SPDR S&P 500 ETF puts has been more than double the same measure for calls. The ratio reached 2.0 only once in the prior six months.
Among corporate movers:
• Drugmakers Gilead Sciences Inc. and Allergan Plc slid after profits missed estimates.
• Anthem Inc. climbed after saying it may join other major health insurers in largely pulling out of Obamacare if its results don't improve.
• A.P. Moller-Maersk A/S tumbled after reporting a slump in earnings.
• Danske Bank A/S fell after Maersk sold its remaining stake in the lender.
• Hugo Boss AG climbed after reporting profit that beat estimates.
