September 27, 2016 / 4:07 AM / 2 years ago

Factbox: Market participants react to U.S. presidential debate

(Reuters) - Democrat Hillary Clinton and Republican Donald Trump traded barbs and accusations on Monday in the first debate ahead of the Nov. 8 U.S. presidential election.

Republican U.S. presidential nominee Donald Trump speaks as Democratic U.S. presidential nominee Hillary Clinton listens during their first presidential debate at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Rick Wilking

Following is a compilation of reaction to the debate from investors, economists and financial market analysts:

FACTBOX: Swing states that may determine the election: reut.rs/1UhE642

MORE COVERAGE: cpurl://apps.cp./cms/?pageId=us-2016

JAMES ATHEY, INVESTMENT MANAGER AT ABERDEEN ASSET MANAGEMENT:

“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.

“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.”

MICHAEL METCALFE, HEAD OF GLOBAL MACRO STRATEGY AT STATE STREET GLOBAL MARKETS, LONDON:

“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.

“While there are many weeks of the campaign to run, the market reaction to the first debate does not mean that volatility will dissipate, but it does suggest Trump’s recent momentum has been arrested.”

“The recent narrowing in the polls means that markets have had to discount more uncertainty, and one debate will not settle that.”

KIT JUCKES, FX STRATEGIST AT SOCIETE GENERALE, LONDON:

“The press verdict on the first U.S. presidential debate is that Hillary Clinton ‘won’, but Donald Trump didn’t lose badly enough to really reduce the uncertainty. The market verdict is that the Mexican peso, the South African rand and the Korean won all won, while the Japanese yen was the loser.”

JACK ABLIN, CHIEF INVESTMENT OFFICER AT BMO PRIVATE BANK IN CHICAGO:

“Investors celebrated that Hillary didn’t lose. Market trading higher and the peso is strengthening.”

“Hillary came through the debate unscathed. Trump spent more time on the defensive.”

BRIAN JACOBSEN, CHIEF PORTFOLIO STRATEGIST, WELLS FARGO FUNDS MANAGEMENT, MENOMONEE FALLS, WISCONSIN:

“I’m not sure I learned anything new listening to the debate. Neither candidate imploded, but based on the strengthening of the Mexican peso ... I think this round goes to Clinton.”

RANDY FREDERICK, MANAGING DIRECTOR, TRADING AND DERIVATIVES, CHARLES SCHWAB, AUSTIN, TEXAS:

“The positive reaction in the (equities) futures markets probably implies that Hillary Clinton was perceived as the winner. The market is often said to dislike uncertainty, and most experts seem to consider Donald Trump as the more uncertain candidate.”

PETER KENNY, SENIOR MARKET STRATEGIST, GLOBAL MARKETS ADVISORY GROUP, NEW YORK:

“Both futures and the Mexican peso are accurate indicators of how markets interpreted the debates. Both moved only modestly but both moved in tandem - higher. I believe that investors pricing in the odds of either candidate winning. Modest positive moves suggest the Clinton campaign both managed expectations and delivered on beating them. The fear for investors was that she would either have some physical issue, look weak or have an excuse for one or both. She looked sharp, on point and clearly delivered on a message and style that reassured markets.”

BRIAN BATTLE, DIRECTOR OF TRADING, PERFORMANCE TRUST CAPITAL PARTNERS, CHICAGO:

“Debate really was not outside expectations. Trump was Trump and Clinton kept calm and seemed bemused.

“It was underwhelming on policy and there were no gaffes or revelations. It was a personality debate, not a policy discussion.”

AARON JETT, VICE PRESIDENT, GLOBAL EQUITY RESEARCH, BEL AIR INVESTMENT ADVISORS, LOS ANGELES:

“The market wants Hillary to win. The better she does (or the worse Trump does) the better the market will do in the short term. She did well enough to sustain the market for now. She did fine and Trump rambled on at times making her look better. We should gain back some of what we lost on Monday.”

J.J. KINAHAN, CHIEF STRATEGIST, TD AMERITRADE, CHICAGO:

“It is interesting that in a debate that was so full of negatives from both sides, the result in the Stock Index Futures was very positive. I guess it does show that some positives can come from an absolute free for all. I don’t know that we learned much about the candidates but the market definitely liked it. Don’t forget in the middle of this we also had some numbers showing slightly better growth than previously expected and that also helped the last 5 points or so in the futures rally.

“After a weak day some of this may just be people covering their risk overnight.”

MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ, NEWPORT BEACH, CALIFORNIA:

“While both candidates spoke to the importance of higher economic growth whose benefits are shared more broadly, the debate highlighted their different approaches to tax policies and what ultimately delivers greater prosperity.”

HUGH JOHNSON, CHAIRMAN AND CHIEF INVESTMENT OFFICER, HUGH JOHNSON ADVISORS, ALBANY, NEW YORK: 

“Both presented different views on reviving the economy. Secretary Clinton’s tax and spending plans were well articulated and well thought out. Trump’s thoughts that included significant tax cuts and implicit promises of infrastructure spending were emotionally appealing but not nearly as well thought out or economically sensible. Each will appeal to different sets of voters. A good example of Trump’s emotional, yet uninformed, thoughts were his comments (a) that the recovery was the ‘worst’ ever, (b) that Janet Yellen was political, (c) the rise in stock prices has been a bubble that would ‘burst’ if interest rates were increased.”

“I would be inclined to give Secretary Clinton a modest edge although Trump did a good job presenting himself as the candidate of change.

“Her stamina answer was a real good - close to a clincher.”

JEFFREY GUNDLACH, CHIEF EXECUTIVE, DOUBLELINE CAPITAL, LOS ANGELES:

“It’s the establishment versus the anti-establishment. No one ‘wins’ a debate in September. Trump did himself a little bit of good and set up the later debates to his advantage.”

DAN IVASCYN, GROUP CHIEF INVESTMENT OFFICER, PIMCO, NEWPORT BEACH, CALIFORNIA:

“We continue to believe a Clinton victory will be the most likely outcome. Nothing tonight to change that view

MARKET REACTION:

STOCKS: S&P 500 emini futures gained ground over the course of the debate, with the contract price moving from down 5 points as the event began to up 14 points by early Tuesday, a few hours after it finished.

BONDS: 2- and 10-year Treasury yields rose modestly

FOREX: The Mexican peso gained 1.7 percent against the dollar. The dollar index, meanwhile, was little changed as were exchange levels against the yen and euro

Americas Economics and Markets Desk; +1-646 223-6300

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