Stock markets tread cautiously yesterday with a late flurry of buying in Europe by investors hoping to join any post-US election rally in the case of a Clinton win.
Frankfurt and Paris both reversed earlier losses to close slightly higher, while London gained 0.5% at 6,843.13 points, with all eyes fixed on the presidential poll pitting Democratic frontrunner Hillary Clinton against Republican Donald Trump.
“US election day has arrived and relief turned to cautious unease in yesterday’s trading,” Jasper Lawler, analyst at CMC markets, said in a note to investors.
“The day finished with the same quiet tone it started with. With voters hitting the booths, it’s too late for any last minute news to make a difference,” he added.
Shares in all main European markets, as well as the US, rallied on Monday after the FBI said it would not pursue criminal charges against Clinton over her use of a private e-mail server while Secretary of State.
Clinton cast her vote near her home in New York state yesterday, while Trump cast his ballot near his New York home. The winner is not expected to be known before 0300 GMT.
Some 40mn Americans have already cast ballots in states that allow early voting, and opinion polls suggest that 69-year-old former first lady Clinton has a slight edge.
Unease remains, however, with maverick tycoon Trump having rallied from a double-digit deficit in some polls to within striking distance of Clinton, while analysts drew parallels with Britain’s shock EU exit vote.
Spreadex analyst Connor Campbell said Clinton was “the clear market-favourite” but added: “Of course, this was basically the situation for the Remain camp pre-referendum.”
The US dollar firmed slightly against most major currencies.
“A Donald Trump win would likely see the US dollar see significant losses against the pound, euro and yen,” Lawler said.
“The dependency of the Canadian and Mexican economies on the US means the Mexican peso and Canadian dollar would be the biggest losers from a Trump win, and his potentially more isolationist administration.”
John Higgins, of Capital Economics, also said a Trump win “could cause major upheaval”.
Most Asian markets extended gains yesterday on hopes Clinton will beat Trump – but many opinion polls indicate the race is too close to call.
“Cautious investors adopt a wait-and-see policy as election day finally arrives in the US,” said Andy McLevey, head of dealing at stockbroker Interactive Investor.
“Having had their fingers burnt in the aftermath of the UK EU referendum, it is of little surprise many have paused for breath, as despite polls signalling a Hillary Clinton victory seems likely, it is still too close to call and we may see some jitters as the day progresses.”
Monday’s rally followed a week of turmoil sparked by the FBI’s announcement on October 28 it was looking into the issue, despite having cleared her once already in July.
Clinton is considered by many investors to be a safer bet than Trump, who is seen as a loose cannon with policies many fear could wreck the world’s top economy.