Article / 27 September 2016 at 7:00 GMT

Morning Markets: Trump outpointed — Mexico's peso shoots

Managing editor, / Saxo Bank



  • UK: CBI Distributive Trades Index        (1000 GMT)
  • Brazil: Consumer Confidence Index     (1100 GMT)
  • US: Services PMI                                  (1345 GMT)

There was no knock-out blow but a composed performance from Democrat nominee Hillary Clinton against an increasingly irascible Donald Trump helped her edge the first presidential debate and reintroduce an element of risk-on to markets.

The Mexican peso — a direct proxy for Donald Trumps election prospects — was the big winner as USDMXN fell 1.7% from a record at just under the 20.0 handle to the sub-19.50 level while USDCAD also fell approximately 100 pips. The S&P 500 Futures Index also rallied and that was followed by a 1% rise for the Hang Seng and a 0.7% spike for Nikkei, the latter partly spurred by a weakening yen.

While Trump was able to land a telling blow on Clinton's support for the North American Free Trade Agreement, Clinton took the debate after deflecting Trump's attack on her suitability for the role of president after her recent health scare. With six weeks to go until election day, and with two more debates to come, the race for the White House remains neck-and-neck, nevertheless, and plenty more swings of fortune are inevitable on the run in.

Deutsche Bank 's woes just seem to get worse after the German banking giant's shares sank 7.5% to €10.55 after it botched an attempt to assure markets that its capital reserves were adequate to handle a huge US fine without requiring the assistance of the German government. The share price was above €30 in the summer of 2015 and is now at its lowest since the early 1980s. Banking stocks across Europe took fright as fears of systemic crisis took hold.

Oil meanwhile is once again caught in no-man's land ahead of the key meeting at Algiers tomorrow as Tehran boxes clever over the Saudi Arabian offer on oil production. The meeting begins at 1400 GMT and markets could seesaw as fragmented snippets and headlines race for the limelight.

Finally some cheer for the Brexiteers from an unlikely source after German media boss Mathias Dopfner said freedom from European Union rules would put Britain on a fast track to get ahead of the EU within five years. That will have been music to the ears of foreign secretary Boris Johnson and Brexit minister David Davis after WTO chiefs warned that its rules would not provide a ready-made way for exiting the EU pointing towards a 'hard' Brexit as the most likely outcome of the UK's eventual union exit.

Market signals

Asian session

  • Asian investors were braced for today's first US presidential debate, opening lower
  • Australian 10-year yields fell another 0.5% to 1.959 per cent this morning
  • Profits of China’s industrial corporations jumped the most in three years
  • Industrial profits rose 19.5% in August from a year earlier to $80.2 billion
  • Asia's financial markets reported a win for Clinton  
  • Citigroup expects volatility in bullion and raises odds of Trump success to 40%
  • A CNN/ORC poll of debate watchers, 62% said Clinton won the exchange
  • Mexico’s peso rallied from a record low, US stock index futures rose and gold retreated
  • The MSCI Asia Pacific Index was up 0.3%, recovering from an early loss of 0.9%
  • The Nikkei Stock Average 225 was up 0.55% at 0516 GMT
  • The Hang Seng was up 1.16% at 0521 GMT and the Shanghai Composite was flat
  • The ASX/S&P 200 was down 0.5% at 0547 GMT
  • Crude oil slipped 0.3% to $45.81/barrel after gaining 3.3% in the last session

Forex ahead

  • The yen fall as much as 0.4% against the USD in afternoon trade
  • AUD was trading at 0.7635 cents early, up from 0.7618 cents yesterday
  • The Mexican Peso rose 2% and CAD strengthened from its weakest level since March
  • South Korea’s won strengthened, as did the AUD and NZD after the debate

From the Floor

Presidential debate. "The immediate reaction is over with and we are back to square one in forex terms after last week's BoJ/FOMC," says Hardy.

German giant. "The credit markets are increasingly worried about Deutsche Bank in the short term," says Garnry.

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

If US economic activity is set to pick up, there should be some evidence in today's flash PMI for September, writes James Picerno

Braced for battle
The local market opened lower as investors braced themselves ahead of this morning's Clinton-Trump debate, writes the team at Saxo Capital Markets (Australia).

BoJ takes centre-stage
There are bigger forces at play for financial markets than the Clinton-Trump sideshow, writes Max McKegg.

Looking glass
We're still assimilating the impact of last week's central-bank retreat to the sidelines and that has implications across a lot of assets, says James Kim [Video]

Regime change
We're in for a period of prolonged dollar weakness and there is little reason to expect a change in the runup to the big Federal Reserve meeting in December, says Kay Van-Petersen [Video]

v She looks to have edged it last night, but there's a long way to go. Photo: iStock

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