Dubai

Investors are increasingly becoming risk averse as the race for the US president tightens just days before the elections.

Global stocks retreated again for the sixth time in seven days and fell to its lowest level since July. Investors have started ploughing money into safe-haven assets like gold, yen and Swiss Franc as polls indicate Republican Presidential candidate Donald Trump is now running ahead of Democrat Hillary Clinton.

The Dow Jones Industrial Average was down 0.28 per cent at 17,986.62, while the S&P 500 index was 0.26 per cent lower at 2,106.13. In Europe, the Stoxx Europe 600 Index was 0.51 per cent lower at 333.61. The German DAX was 0.90 per cent lower at 10,431.79.

Earlier in Asia, the situation was equally bad. The Asia Dow Index closed more than 1.02 per cent lower at 2,952.48.

Following its global peers, the Dubai Financial Market general index closed 0.93 per cent lower at 3,291.52. The Abu Dhabi Securities Exchange general index ended 1 per cent lower at 4,264.50.

“Clearly the world is reacting to ongoing developments in the US Presidential election. As polls indicate a Trump victory is more likely than it has been for some time, markets are reacting to the perceived economic and political uncertainty that a Trump win could generate,” Mark Burgess, CIO EMEA and Global Head of Equities at Columbia Threadneedle Investments told Gulf News over email.

Currently, ESPN’s FiveThirtyEight.com gives Hillary Clinton a 69.5 per cent chance of a win as against Donald Trump at 30.4 per cent, though the margin has narrowed over the past few days after the FBI opened an email probe against Clinton. Results will be out post US market hours next Tuesday.

The greenback remained weak. The dollar index fell 0.40 per cent to be at 97.35.

“The US dollar has actually weakened primarily due to election uncertainty. If election uncertainty stays high, we expect this weakening trend to continue,” Jerry Lucas, strategist at UBS Wealth Management told Gulf News.

The Mexican Peso, seen as a proxy to a Donald Trump win, continued to depreciate against the greenback. The Mexican peso fell 0.8 per cent to be at 19.3558 against the dollar.

But before that, investors will also look at the US Federal Reserve meeting on Wednesday to get hints on the next hike in US interest rates.

Safe haven trade:

“Investors have abandoned the ship when it comes to the equity market and it is more about safe-haven trade. Hence we are seeing the volatility index moving higher,” said Naeem Aslam, chief market analyst at Think Markets.

Gold rose $13 for another session to its highest level in a month to near the $1,300 per ounce, just $70 away from the Brexit levels.

The yen climbed 0.5 per cent against the dollar, after surging 0.6 per cent in the last session. The franc also added 0.5 per cent following a 1.4 per cent jump.

“The headwinds increase the general uncertainty that markets are feeling, which partly explains the heightened awareness and reaction to the publication of any economic data, election polls or central bank announcement,” said Burgess from Columbia Threadneedle Investments.