Right after yesterday's debate between the two main presidential candidates was finished, the market hinted at the winner.
While the Americans were sleeping after last night's debate between Hillary Clinton and Donald Trump, the analysts noticed several important market trends that may suggest the winner. One of the "clear" market indicators was the 2% jump of Mexican peso, the currency that has been highly sensitive to the American elections. The main reason for that is Trump's claims to "build a wall" between Mexico and the U.S. and adjust the existing trade agreements between the countries. In the past days, Mexican currency was at its all-time lows as Trump moved forward in the election polls. Therefore, a 2% rally of peso points at Clinton dominating the debate, say the Wall Street Journal's experts.
"In a similar way that sterling became the market proxy for Brexit risk, so moves in the Mexican peso and expected volatility of the Mexican peso appear to have become the main market proxy for expressing the probability of a Trump presidency," said Michael Metcalfe, the Head of Global Macro Strategy at State Global Markets.
In addition to that, reports CNBC, the U.S. stock index futures were consistently growing throughout the debate and reached their near session highs by the end of it. Dow Jones (INDEX: DIJA) futures grew by over 100 points whereas S&P 500 (INDEX: US500) was up 0.3%. Next to that, the Stoxx Europe 600 as well as German DAX (INDEX: DAX) index got slightly lifted during the debate, yet they got quickly weighed down again because of Deutsche Bank's (NYSE: DB) "big trouble" with the U.S. Department of Justice as well as today's news that a few other European players may be potentially facing similar allegations.
In general, the analysts say that the uplift in the stock market can be associated with Clinton leading the debate as she is likely to favor risk-assets such as stocks judging by more clarity on her policies and potential trade negotiations plans, as compared to Trump. Also, Clinton is mostly perceived as a "safe pair of hands" as she is not likely to radically question the current market situation. Yet, the market changes discussed by the analysts are still relatively minor to make any definite conclusions.
"What we're seeing in markets this morning is a small, collective sigh of relief because most commentators, and the few polls that have been released, suggest Clinton won the debate. Equities have undone much of yesterday's weakness and key Trump indicators such as the Mexican peso and Canadian dollar have rallied. This supports the notion once again that Trump is seen as protectionist and anti-globalization," said James Athey, Investment Manager at Aberdeen Asset Management, as reported by Reuters.
However, the market might not share the opinion of the actual voters. CNBC's experts say that the market signs need to be supported by the polls in order to give a full picture. Unfortunately, the market participants don't always have the same point of view with the average voter, as the Brexit taught us the hard way.
"The reality is that these moves are all fairly insignificant. Polls on voting intentions still show that the race is essentially neck and neck. It will be these polls which truly have the power to drive a genuine re-pricing," said Athey.