US presidential debate: The market's verdict

  • 28/09/2016
(Reuters)
(Reuters)

The betting markets and the currency markets are in agreement. They both say Hillary Clinton beat Donald Trump in yesterday's US presidential debate.

Betting aggregator PredictWise says the odds of Hillary Clinton winning the Presidency have risen, from 69 percent before the debate, to 74 percent now.

Trump's chances slumped to 26 percent.

The financial markets appeared to call the debate for Hillary Clinton about 15 minutes after the two candidates started talking.

The Mexican peso surged against the US dollar, gaining 2.3 percent from its lows for the day.

The Peso has been sold off lately, as the opinion polls narrowed. A Donald Trump presidency is considered bad news for the Mexican economy.

The feeling that Hillary Clinton had won the debate also saw investors buy "risk" currencies like the New Zealand dollar.

The Kiwi had risen by 0.3 percent to 72.99 US cents by 7am Wednesday, New Zealand time.

The Dow closed up 0.74 percent, the S&P500 rose 0.64 percent and the Nasdaq gained 0.92 percent.

The rise in stock prices was helped by a new report showing a rise in consumer confidence.

But have the markets got it right?

The Brexit vote shows how professional investors are not always on the money. The financial markets wrongly predicted that Britain would stay in the European Union.

Share markets and currency traders put a lot of faith in the betting markets, which were indicating the bulk of the money was being bet on the UK staying in the EU.

But that obscured something that turned out to be very important.

Three quarters of the £40m gambled on the referendum was placed on "remain".

But there were many more individual bets placed on "exit." The bets played on "leave" far outnumbered the bets placed on "remain". But the weight of the money favoured "remain".

Both candidates will be hoping to have not only won over some undecided voters yesterday, but they will also want to boost donations to their campaigns.

So far donations are a race that Hillary Clinton is winning.

By the end of August she had raised US$795 million and Donald Trump had raised US$403 million.

Put aside the Political Action Committees and the Clinton campaign had directly raised US$413 million to the Trump campaign's US$166 million.

Last month the Clinton campaign raised US$59.5 million and the Trump campaign raised US$41 million.

But Donald Trump leads in one area. Last month he raised US$12 million in small donations compared to Clinton's US$8 million. Small donations are amounts of less than US$200.

If you look at total small donations Hillary Clinton still leads Donald Trump. Her campaign has raised around US$150 million in smaller bets, compared to around $100 million for Donald Trump.

But his campaign would argue that he started out in a far more crowded field of 17 candidates.

What nobody knows yet is whether the small donations being placed on Trump are sending the same message that was sent by the small bets placed on Leave ahead of the Brexit vote.

Newshub.