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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden (until 2.40) and Nick Fletcher

Fed leaves US rates unchanged, as shares slide on election fears – as it happened

Pedestrians walking through Waterloo Bridge with the skyline of the City of London in the background.
Pedestrians walking through Waterloo Bridge with the skyline of the City of London in the background. Photograph: Daniel Leal-Olivas/AFP/Getty Images

But it is not a given that the Fed will hike in December, says economist James Knightley at ING Bank:

There is little in the statement to suggest that a December hike is definitely going to happen (markets currently pricing in a 67% chance of a move). The statement comments that ”the case for an increase in the federal funds rate has continued to strengthen” while adding the word “some” to the line that it wants to “wait for SOME further evidence of continued progress towards its objectives”. This all suggests that things are moving in the right direction, but the Presidential election is an obvious reason for waiting.

Assuming Clinton wins, markets are likely to react with relief given expectations of policy continuity. This, coupled with the reasonably firm growth, rising employment and a gradual pick-up in inflation should reinforce market expectations for a December rate hike. Should Trump win then this is likely to hurt market sentiment given uncertainty as to what he will actually do when in power. It is hard to imagine the Fed hiking in this environment. We also have plenty more data to come ahead of the December 14 FOMC meeting, including two more job reports so there are other reasons for caution.

The Fed statement has failed to give much support to the dollar, and US markets have struggled for direction after the news. The Dow Jones Industrial Average is now down 33 points, compared to around 70 ahead of the statement. The US dollar index has lost 0.3% to 97.38.

On that note, it’s time to close for the evening. Thanks for all your comments, and we’ll be back tomorrow.

Updated

Although there was no rate change today, it looks increasingly likely there will be one in December. Paul Sirani, chief market analyst at Xtrade, said:

With just days to go before election fever sweeps America, Janet Yellen’s Federal Interest Rate statement held no shocks with rates remaining the same.

However, it’s becoming ever more likely that Yellen will implement a raise early next month following signs that the American economy is gradually picking up steam.

She made clear in September that a rise before the end of 2016 was more than likely and with employment and inflation continuing to strengthen the central bank may get its wish.

The Fed has dropped a reference to inflation remaining low in the near term.

In September it said:

Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further.

This now reads:

Inflation is expected to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further.

The Fed said in its statement:

The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will strengthen somewhat further. Inflation is expected to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments.

Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The Committee judges that the case for an increase in the federal funds rate has continued to strengthen but decided, for the time being, to wait for some further evidence of continued progress toward its objectives. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.

This time there were only two Fed dissenters who wanted to raise rates not three, Esther George and Loretta Mester.

Eric Rosengren, who voted for a rise last time, has now sided with the majority.

Updated

Federal Reserve leaves US rates unchanged

BREAKING NEWS

To no one’s great surprise, the Federal Reserve has opted to leave US interest rates unchanged just days ahead of the presidential election.

It said it was waiting for further evidence of progress towards its objectives before hiking.

The US Federal Reserve’s interest rate decision will be released in less than an hour.

While most commentators expect there to be no change - not this close to the presidential election - the prospect of a rate rise in December is thought to be reasonably likely, given the recent reassuring US economic data.

There is likely to be a focus - as usual - on the exact wording of the Fed statement and whether it shows any changes from the September comments. At that meeting seven of the Fed members voted for no change, with three, Esther George, Loretta Mester, and Eric Rosengren, backing an increase. Any variance here could also give a clue to the likely outcome in December.

European markets hit by US election fears

Investors have been unnerved by suggestions that Donald Trump is gaining ground in the US presidential race, with one poll this week even showing him in the lead over Hillary Clinton. Combined with a slump in oil prices following a record weekly rise in US crude stocks, this has pushed markets in Europe sharply lower.

But on Wall Street the Dow Jones Industrial Average, which lost 100 points or so on Tuesday, has not been hit as badly (so far), and is currently down just 20 points ahead of the latest US Federal Reserve interest rate decision.

Meanwhile the Vix index of volatility, seen as a gauge of investor fears, is up 3% to 19. When Clinton looked a shoo-in to win, the index was hovering around 13. But despite this recent rise, it is still well below the 25 level it reached after the Brexit vote in June. Jasper Lawler, market analyst at CMC Markets, said:

Less than a week out from the US election and markets are demonstrating both complacency and a palpable fear at the same time. A surge in the VIX index shows volatility is on the rise and investors are hedging equity exposure with safe havens like gold and government bonds. But at the same time equity benchmarks are only modestly down, showing an overriding comfort in owning stocks.

The VIX is up over 40% in the last seven days, reaching above 18, a level in which many investors sit up and pay attention to signs of heightened risk in the market. Over that same period the FTSE 100 and S&P 500 are down 2-3%.

There is still a general perception that Hillary Clinton will take the White House, but the surprise Brexit result is fresh in minds of investors and they are buying gold and VIX index tracking products to hedge their bets.

The final scores in Europe showed:

  • The FTSE 100 fell 71.72 points or 1.04% to 6845.42, its lowest level since 27 September
  • Germany’s Dax dropped 1.47% to 10,370.93
  • France’s Cac closed down 1.24% at 4414.67
  • Italy’s FTSE MIB finished 2.51% lower at 16,474.52
  • Spain’s Ibex ended down 1.85% at 8873.4
  • In Greece, the Athens market dipped 0.15% to 581.56.

Ahead of the US Federal Reserve interest rate decision in a couple of hours and the Bank of England meeting tomorrow, the dollar continues to weaken against the pound.

Jitters about the prospect of Donald Trump winning the White House have sent the US currency lower, to the benefit of sterling which is now up 0.57% at $1.2313, a three week high.

The pound is not faring so well against the euro but nor is it losing ground, being pretty much unchanged at €1.1078.

Back with oil:

Global manufacturing grew at the fastest rate for two years in October, according to data from purchasing managers surveys in more than 30 countries.

The JP Morgan Global Manufacturing PMI, compiled by Markit, rose to 52 in October form 51 the previous month, its highest since October 2014. Markit said the surveys hinted at “ a welcome resurgence of life in the world’s factories at the start of the fourth quarter. Inflationary pressures also picked up to the highest for nearly three years.”

It said the data were roughly consistent with global manufacturing output rising at a reasonable 4% annual pace.

With investors spooked by the prospect of Donald Trump possibly winning the US election, not to mention the plunge in oil prices following the jump in US crude stocks, markets remain under pressure.

The FTSE 100 is currently down 0.9%, Germany’s Dax has dropped 1.2% and France’s Cac has lost 1.1%.

On Wall Street, the Dow Jones Industrial Average has not been so badly hit and is currently 0.2% lower.

That could mean that investors are not necessarily convinced by polls showing Trump in the lead. Kathleen Brooks, research director at City Index, said:

The markets are not in full on panic mode right now, suggesting that they still think Clinton could clinch a win next week. This is reflected in the Vix volatility index, which is considered a fear gauge for Wall Street. Even though it has risen in recent days it is still below 20%, to put this in context, after the Brexit vote in June volatility spiked above 25%.

Global stock markets are generally lower on Wednesday, but US markets have outperformed their European counterparts even with 6 days to go before the US election. Interestingly, the Dow Jones Transport Index, considered a lead indicator for Wall Street, is higher today. Considering a Trump presidency is considered the worst outcome for the US economy, the fact that this index has not fallen further on the back of the bad poll news for the Clinton camp, suggests that the US equity market may not sell off sharply until volatility spikes further, or until the actual result is confirmed.

But the other potentially market moving event is the US Federal Reserve interest rate announcement later. Brooks said:

The market is expecting a 14% chance of a hike tonight. If the Fed does hike, that would throw the cat among the pigeons, and we could see a steeper sell off in equities, a rally in bond yields and a broad-based recovery in the dollar.

However, in our view the bigger risk from today’s meeting could be a dovish slant from the Federal Reserve, who may not want to commit to a rate hike until the election result is confirmed. Although the Fed is expected to be politically neutral, a potential market sell-off on the back of a win for Trump next week could put the prospect of a December rate hike to bed for the Fed. Added to this, the Fed chair and vice chair have given speeches with fairly dovish slants in recent weeks, so a sell-off in the dollar on Wednesday could be in advance of a dovish “shock” from the Fed later on today.

Crude slumps as US oil stocks surge

Oil prices are under pressure again after a much bigger than expected rise in US crude stocks.

Last week, crude stocks rose 14.42m barrels to 482.58m compared to expectations of an increase of just 1m barrels, according to the Energy Information Administration. This is the highest weekly build on record. Last week there was a 0.55m fall in oil stocks.

Gasoline stocks fell by 2.21m barrels, higher than the 1.9m drop expected.

A rise in stocks reported by the American Petroleum Institute on Tuesday had already signalled a jump in the EIA figures was possible:

With the build in stocks signalling oversupply and falling demand, Brent crude is on the slide, down 2.89% to $46.75 a barrel.

West Texas Intermediate - the US benchmark - has dropped 3.2% to $45.15.

Updated

Time for a quick recap.

World markets are falling back today, as investors get a bad case of pre-US election jitters. Britain’s FTSE 100 has hit its lowest level since the end of September, while the pound has popped over $1.23 for the first time in three weeks.

The FTSE 100 this lunchtime
The FTSE 100 this lunchtime Photograph: Thomson Reuters

Moody’s has warned that the UK will be downgraded if it loses ‘core’ access to the EU single market after Brexit. The credit rating agency says growth will suffer if British firms lose their current access:

One scenario that Moody’s considers to be realistic is a series of accords offering access to the EU market for goods and more constrained access for services, in particular financial services. However, such an outcome is far from certain.

Alastair Darling, the former UK chancellor, says there is an ‘urgent need’ for Britain and the EU to hold grown-up talks about the situation.

But UK drinkers may find themselves struggling to find a pint of foreign beer in their local Wetherspoons. Chairman Tim Martin says he’ll take steps if Brussels keeps ‘bullying’ the UK.

A UK court will rule tomorrow on whether Theresa May trigger article 50 and begin the Brexit process without MPs voting on the issue. Set your alarm for 10am GMT!

Updated

Nervous investors have just pushed the gold price up to a new one-month high,at $1,300.91 per ounce.

Markets still dogged by US election jitters

Moody’s warning that Britain’s credit rating is vulnerable hasn’t improved the mood in the City.

The FTSE 100 is still hovering at a one-month low, down 32 points at 6884. The other European markets are also in the red, down around 0.8%, leaving the Stoxx 600 index at its lowest since July.

And shares are also dropping on Wall Street at the start of trading:

Investors are still worrying about that opinion poll, putting Donald Trump narrowly ahead of Hillary Clinton.

So the dollar remains under pressure , keeping the pound up over the $1.23 mark for the first time in two weeks.

Chris Saint, senior analyst at Hargreaves Lansdown currency service, says:

The dollar is broadly lower ahead of tonight’s Federal Reserve interest rate decision, with US election anxieties returning to the fore after Clinton’s lead over Trump in the polls has evaporated following the new FBI probe into her personal email use.

Joshua Mahony, market analyst at IG, says investors are suddenly considering that Trump has a real chance of victory, following the FBI’s new probe into Clinton’s emails.

Global stock markets are lower this morning, as US election fears dominate, despite a week’s worth of top tier data to contend with. The sudden change in fortunes set in train on Friday has seen investors run for cover amid a realisation that Trump might actually win.

Here’s our latest report from the US campaign trail.

Here’s our news story about Moody’s Brexit warning, plus some other developments:

A new survey of US employment has come in weaker than expected.

The monthly ADP survey shows that US companies created 147,000 new jobs in October, shy of the 165,000 which economists expected.

The construction sector saw a sharp drop in employment, down 15,000.

This may suggest that Friday’s non-farm payroll - the main measure of US employment -- will be weak.....

We’ve also seen signs today that Britain’s housing market may be slowing.

First, Nationwide reported that prices stalled last month - ending a 15 month run of rising prices.

Robert Gardner, chief economist at Nationwide, says the market seems “fairly subdued”.

Second.. data firm Markit’s latest survey of the building sector painted a mixed picture.

The construction PMI (which tracks activity) rose to 52.6 from 52.3, which shows business activity increases at fastest pace since March.

But...new order growth slowed, and business confidence dipped sharply to its second-lowest level since May 2013.

Markit says it’s partly due to the EU referendum.

A number of survey respondents cited the impact of Brexit uncertainty on investor sentiment, alongside reduced confidence towards the general economic outlook.

Ireland’s leader, Enda Kenny, has warned that negotiations between EU states over Britain’s exit from Europe “could turn vicious.”

Speaking at a Brexit conference in Dublin, Kenny said he and Theresa May are both committed to avoiding a new border being built between Northern Ireland and the Republic.

Kenny said:

Neither I, nor the prime minister, desire to limit the freedom of people on both sides of the Irish sea to trade, live, work and travel freely across these islands.

And he also hinted at the tensions already developing between London and the rest of the EU:

If you go to Downing Street, if you drop in there it’s fine, but sometimes when friends call they can overstay their welcome.

Our Politics Live blog has all the details:

Heads-up: Bloomberg’s legal correspondent says the high court will rule tomorrow morning whether article 50 can be triggered without a parliamentary vote:

Pound hits $1.23

Kerching! The pound just hit $1.23 for the first time in two weeks.

Sterling has now gained one and a half-cents since Monday morning, partly due to relief that Mark Carney will stay as Bank of England governor until June 2019.

Today’s rally is mainly due to fears over the US election (as covered earlier), which have sent the dollar down against the yen, the euro and the Swiss franc as well.

Moody’s new report on the consequences of the EU referendum is only available to its customers, but there’s a summary here:

Moody’s: UK sovereign rating would be downgraded if the UK was unable to conclude an agreement with the EU that protected core elements of its access to the Single Market

The rating agency also has bad news for Remain supporters who are hoping that Brexit might not happen:

In Moody’s view, there is little likelihood that the UK will not exit the EU.

Updated

The prospect of Wetherspoon’s ditching European drinks brands in a Brexit protest has caused quite a stir.

Historian Greg Jenner was reminded of the great Gin Craze that gripped Britain three hundred years ago, when the UK tried to restrict imports of French brandy in favour of British gin.

It backfired, though, once Britons developed quite a thirst for it.

Journalist Rupert Myers suggests such a move might backfire on ‘Spoon:

Juho Romakkaniemi, head of cabinet to EC vice-president Jyrki Katainen, has criticised the idea.

Some people have even suggested that it sounds like a skit from The Pub Landlord, Al Murray’s satirical character.

And it soon might be....

Updated

Darling: We need Brexit clarity now

Alastair Darling

Alastair Darling, the former chancellor of the exchequer, says Theresa May urgently needs to give clarity about the sort of Brexit deal she wants.

Speaking a moment ago, Lord Darling says the prime minister needs to spell out her plans, so a “grown-up conversation” can take place with Brussels. That would help Britain to fulfil June’s referendum while limiting the long-term economic damage of Brexit, he argues.

Darling told Bloomberg TV that:

The referendum decision is the biggest single challenge facing the UK arguably since the end of the Second World War.

Darling points out that Nissan, the Japanese car maker, has received assurances from May which gave it the confidence to build two new models at its Sunderland plant.

That could indicate that May wants Britain to remain part of the single market, and the customs union, Darling adds - but is that just for the auto sector? What about the banks, who rely on passporting to offer services across the EU?

We’ve got to salvage as much as we can so we don’t disrupt trade and damage the UK’s long-term growth prospects.

It’s a pertinent point, given Moody’s warning earlier today.

Darling argues that the government cannot “segregate out” the UK economy, dealing with some concerns immediately (eg Nissan) and leaving other sectors in the dark for a couple of years.

“The one things all businesses don’t like is uncertainty”

Darling, who was Britain’s finance minister during the 2008 crisis, says that both sides have to “recognise the new reality, and get on with it.”

Updated

JD Wetherspoon chairman Tim Martin.

The boss of pub chain JD Wetherspoon has weighed in on Brexit this morning, threatening to ditch European drinks brands unless EU leaders stop “bullying” Britain.

Tim Martin is not happy that European Commission chief Jean Claude Juncker, French President Francois Hollande and German chancellor Angela Merkel have all said Britain should pay a high price for leaving the EU.

He told the Guardian this morning that he’s prepared to throw out foreign drinks brands, and replace them with British alternatives.

“I don’t think Wetherspoon or British buyers are in a weak position because we can switch from Swedish cider to British cider. So the people put in a weak position are the sellers and I think that is the paradox that has not been illustrated.

The UK is in a much more powerful position than most economists would assume.”

Martin (who was in favour of leaving the EU) also suggested the UK consumers could vote with their wallets and shun French champagne and German beer.

Updated

Moody’s is also concerned that the UK government might wilt under the pressure of exiting the European Union, leading investors to lose faith in Britain’s fiscal credibility.

Kathrin Muehlbronner says:

The UK will have to handle multiple, complicated policy decisions in areas including global trade, immigration and regulation.

Given the magnitude and complexity of these decisions, the risk is material that some might damage the UK’s economic or fiscal strength.

Moody's: We'll downgrade UK if it gets a poor Brexit deal

NEWSFLASH: Britain could suffer another credit rating downgrade if Theresa May fails to get a decent Brexit deal from Europe.

In a new report, Moody’s says that it would slash Britain’s credit rating if UK companies lose ‘core access’ to the single market.

It believes the terms at which Britain can trade with the rest of Europe after Brexit are crucial to the country’s long-term prosperity.

Kathrin Muehlbronner, senior vice-president at Moody’s Investors Service, says :

“We would downgrade the UK’s sovereign rating if the outcome of the negotiations with the EU was a loss of access to the Single Market as this would materially damage its medium-term growth prospects.

A second trigger for a downgrade would be if we were to conclude that the credibility of the UK’s fiscal policy had been tarnished as a result of Brexit or other reasons.”

Moody’s singles out the ‘passporting’ currently enjoyed by the City, which allow banks in London to offer services across the EU. If these rights are lost, then it would be ‘credit negative’ for the UK banking sector’s rating, but not enough to prompt a downgrade.

Moody’s currently rates the UK as Aa1, which is the second-highest rating. It downgraded the outlook on 24th June, in the immediate aftermath of the EU referendum.

In the report, Moody’s predicts that the UK will carve out “some form of free trade agreement with the EU”.

One scenario that Moody’s considers to be realistic is a series of accords offering access to the EU market for goods and more constrained access for services, in particular financial services. However, such an outcome is far from certain.

Theresa May has said she intends to get the “maximum possible access to the single market”, while also bringing in new controls on immigration.

However, European politicians have warned that they’re not prepared to sacrifice the ‘four freedoms’ - free movement of labour, capital, goods and services.

And yesterday, an influential European MEP warned that Britain can’t agree a new trade deal until it has left the EU.

Danuta Hübner, a former Polish minister who became the country’s first European commissioner, told the Guardian:

“Formally you cannot conclude or even negotiate the agreement that belongs to a third-country situation while you are still a member. Article 50 is only about withdrawal and only when you are out can [you] negotiate another agreement.

Here are the key points from Moody’s report:

  • Moody’s would downgrade the UK’s rating if we were to conclude that the UK’s loss of access to the Single Market would materially weaken medium-term growth.
  • A second driver for the UK rating will be the fiscal outlook, on which we expect to obtain significantly more clarity with the upcoming Autumn Statement, scheduled for 23 November.
  • A wide-ranging Free Trade Agreement which would limit the negative impact of Brexit on growth remains a plausible but not certain outcome.
  • Moody’s negative outlook for the UK banking system reflects Brexit-induced uncertainties, which are exerting pressure on the revenues, asset quality and profitability of all UK banks, although some are more resilient to such strains than others.
  • Brexit-related loss of “passporting” rights for UK banks that operate across jurisdictions would be credit negative but manageable. The resulting higher costs and reduced inefficiencies are not sufficient to pressure the ratings.

Updated

Conner Campbell of SpreadEx sums up a nervous morning in the City:

A fresh batch of pre-US election jitters has swept the markets this morning, investors fretting over news that Trump has taken the lead in a national poll.

While Clinton is still ahead in the majority of surveys, the fact that the orange-faced Republican nominee has clawed his way back to being a potential victor in the aftermath of the FBI email scandal has sent a wave of fear through first the Asian markets, and now the European open.

While that means the FTSE has dropped 30 points, taking it under 6900 for the first time in over a month, with the DAX and CAC also shedding 0.6% apiece, it has led to a moment of respite for the pound, which rose back above 1.22 against the weakened dollar.

European stock markets have all suffered losses this morning
European stock markets have all suffered losses this morning Photograph: Thomson Reuters

Some good news amid the gloom. The eurozone’s factory sector has posted its fastest growth in nearly three years.

That’s via data firm Markit, which reports that growth picked up across the region (apart from in poor old Greece, which suffered a contraction).

US dollar gets a hammering

The US dollar is having a bad morning, allowing the British pound some relief.

Sterling has hit a two-week high of $1.227 this morning, as US election worries trump (ahem) Brexit fears.

Pound vs US dollar over the last two months
The pound vs US dollar over the last two months Photograph: Thomson Reuters

The dollar has also clattered to a three week low against the euro, a one-month low against the Swiss franc, and a two-week low against the Japanese yen.

However, the US dollar has gained against emerging market currencies - such as the Mexican peso.

Kit Juckes, currency expert of Societe Generale, says investors may struggle to work out the market implications of a Republican win next week:

It’s easy to see Trump as ‘bad’ for Mexico in particular and for US trade-dependent economies in general but there are limits to what a President can legislate. This isn’t like the UK’s EU referendum, where the potential medium-term economic damage of leaving the single market is much clearer.

However, with less than a week to go, market opinion is coming to the conclusion that a Trump win would create too much uncertainty and is bad for risk sentiment generally.

The odds on Donald Trump becoming the most powerful man in the world have narrowed recently, but he’s still only a 27% shot at Betfair.

However, you might remember that the Remain campaign had a healthy lead on 23 June, and we all know what happened next.

Investors take cover in safe-haven government debt

Nervous investors are selling shares, and putting the money into government debt this morning, in another sign of Trump-related jitters.

That’s driving up prices, and cutting the interest rate on the bonds.

Reuters has the details:

British government bond prices jumped on Wednesday, tracking U.S. and German debt prices higher as markets reacted to increased uncertainty about next week’s U.S. presidential election.

Ten-year gilt yields dropped more than 8 basis points on the day to a six-day low of 1.197%, while two-year yields fell nearly 6 basis points to 0.207%, their lowest since Oct. 21.

The move in gilts and many other European government bonds followed a similar fall in U.S. Treasury yields as investors started to rethink their long-held bets of a victory for Democratic candidate Hillary Clinton on signs her Republican rival Donald Trump could be closing the gap.

Updated

FXTM Chief Market Strategist Hussein Sayed reckons markets are in the “early stages of panic” about next week’s election.

Investors are dumping risk assets this morning as latest ABC News/Washington Post tracking polls showed Trump ahead of Clinton for the first time. Trump’s odds for winning the U.S. elections increased after the FBI reopened its investigation into Hillary Clinton’s use of a private server and he will maximise his leverage on the case with less than a week remaining to the election date.

Most major Asian equity indices fell by more than 1%, as Wall Street’s fear index “VIX” soared above 20 levels for the first time since September 12. The Mexican peso which has become the popular election proxy also fell this morning, declining by more than 4.3% for the past six trading days.

And with the dollar weakening, Sayed expects a “a roller coaster ride for the next couple of days”.

The post Brexit vote market reaction is still fresh in investors’ memory and no one wants to be caught on the wrong side of the trade, it will only take another one or two polls showing a Trump lead to boost markets anxiety and thus a steep sell off in equity markets and high beta currencies.

The FTSE 100 over the last quarter
This chart shows how the FTSE 100 hit one-month low this morning Photograph: Thomson Reuters

Updated

Europe’s Stoxx 600 index, which includes the 600 largest companies across the region, has hit its lowest level since 11 July.

Every one of the main European stock market sectors is falling this morning, led by the banks:

FTSE 100 hits one-month low

The skyline of Canary Wharf

European stock markets have opened in the red, as US election angst hits the City.

The FTSE 100 shed 40 points at the open, or 0.6%, to 6875. That’s its lowest level since 30 September.

Across the channel, shares are falling too. Germany’s DAX lost 0.8%, France’s CAC dropped 0.7%, Spain’s IBEX shed 0.9%, and the Italian FTSE MIB is down 0.5%.

This follows last night’s nervy session on Wall Street, where the Dow Jones index closed down 100 points, and the overnight losses in Asia that drove the yen and gold higher.

Mike van Dulken & Henry Croft at Accendo Markets explain:

Anxious investors the world over are pricing in an even tighter US election race, with increased fears of a Trump win next week and the political, economic and market uncertainty that would surely ensue.

The probability of a Clinton win may remain high but a blindside Brexit result is also still very fresh in the memory of market participants.

This chart show how investors are becoming more nervous (the white line), as the Mexican peso (seen as vulnerable to a Trump victory) has dropped (blue line).

The yen is extending its gains against the US dollar as I type - hitting ¥103.57 to the $1. That’s the highest since October 21st.

Hirokazu Kabeya, chief global strategist at Daiwa Securities, says Trump vs Clinton is now the number one issue worrying investors:

“It’s becoming all about the U.S. elections. Markets are trying to factor in the changing atmosphere.”

Election nerves drive yen up and hit the peso

Investors are piling into safe-haven assets such as gold and the Japanese yen, after the ABC News/Washington Post tracking poll put Trump in the lead.

This sent the dollar down to 103.69 yen, from 104.14 on Tuesday night. The Mexican peso was another casualty, weakening to 19.31 to the US dollar, from 19.18 last night.

Elsa Lignos, senior currency strategist at RBC Capital Markets, explains:

The probability of a Trump victory has risen materially since last Friday.

On FiveThirtyEight’s models it is back to 28–30%, levels not seen since before the second debate and the controversial NBC video leak. Although Trump’s chances have been rising steadily since Friday, yesterday set off a scramble for election hedges.

Asian markets hit seven-week low as US election worries build

Stock markets are coming under pressure today as international investors become increasingly anxious about the US presidential election.

In exactly one week’s time, we’ll know whether Hillary Clinton or Donald Trump has won the race to the White House. And with the polls seemingly closing, shares are on the slide.

Asia’s stock markets have fallen overnight, hitting their lowest level in seven weeks.

Japan’s Nikkei fell by 1.7%, the Hong Kong Hang Seng lost 1.4%, and Australia’s S&P/ASX200 shed 1.1%.

This followed losses on Wall Street last night, where stock market volatility hit its highest level since Britain’s EU referendum in June.

Gold, which usually rallies at times of anxiety, has hit a four-week high at $1,293.00

It was triggered by a new ABC News/Washington Post tracking poll which put Trump one point ahead. Hillary Clinton’s team swiftly dismissed it, saying the poll was “not what we see at all”.

But it’s enough to make traders edgy, says Naeem Aslam, chief market analyst at Think Markets:

The surge in gold prices and the volatility index is the real reflection that traders have finally woken up to the reality that the US election does represent a significant risk, something they were completely ignorant about until now.

European markets are also expected to dip today, says Bloomberg’s Caroline Hyde.

The agenda: UK construction report, and US interest rate decision

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

There’s a lot coming up this morning, including new data showing how Europe’s factories, and Britain’s builders, fared last month.

And later on today, the US central bank will end its two-day monetary policy meeting:

  • 9am GMT: Eurozone manufacturing PMI - expected to remain unchanged at 53.3
  • 9.30am GMT: UK Construction PMI - expected to fall to 51.8, from 52.3
  • 6pm: US Federal Reserve - expected to leave US interest rates on hold

On the corporate front, the City are getting results from retailer Next, pub chain JD Wetherspoon, housebuilder Persimmon.

And Nationwide, the estate agent, have just reported that house price growth stalled last month, pulling the annual rate of house price growth down to 4.6%, from 5.3% in September. We’ll have more on that later...

Updated

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A purported 'deleted Instagram story' from Zendaya addressing the Tom Holland wedding rumours has gone viral despite no credible evidence confirming it ever existed.
International Business Times UK
International Business Times UK
Did 'Unrecognisable' Carrie Underwood Undergo Plastic Surgery? Fans Stunned By Songress' New Look In Latest Update
Carrie Underwood faces claims she looks 'unrecognisable' in a new selfie, as scrutiny over plastic surgery, diet and her blunt American Idol judging intensifies.
International Business Times UK
International Business Times UK
Woman spots MAGA supporters at Disneyland. Then she catches them cutting in line for Mexican food: ‘The irony’
A woman allegedly saw MAGA supporters cutting in line at Disneyland to get Mexican food. The hypocrisy has many TikTok commenters fuming. 
The Mary Sue
The Mary Sue
Megan Fox hits back at wild ‘clone’ conspiracy after Instagram return
The actress returned to Instagram on Wednesday after an almost two year break from the platform
Evening Standard
Evening Standard
Benny Blanco's Hygiene History: Toe Kiss, Dirty Feet, No-Shower Confession, and Cheese Bath
Explore the viral toe kiss between Selena Gomez and Benny Blanco on the 'Friends Keep Secrets' podcast, along with fans' chatter about their quirky relationship and hygiene debates.
International Business Times UK
International Business Times UK
Influencer Jaclyn Hill shares how filler has ‘migrated’ across her face after weight loss
The influencer says she was ‘so happy’ when the ‘filler migration’ was confirmed by her doctor
The Independent UK
The Independent UK
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