NEW YORK (AFP, REUTERS) - Wall Street stocks jumped more than 2 per cent on Monday (Nov 7) as global markets rallied after the FBI cleared US presidential candidate Hillary Clinton in an e-mail probe.
Safe haven gold and US Treasury bond prices fell.
Analysts described the gains as a relief rally in the final session before the US vote on Tuesday, on the presumption the FBI's announcement on Sunday boosted the odds for Democrat Clinton, a clear favourite of investors over Republican Donald Trump.
"Now that uncertainty surrounding the FBI investigation has been lifted, investors believe Hillary Clinton will win tomorrow," said Mr Jack Ablin, chief investment officer of BMO Private Bank.
The rally Monday ended a nine-day losing streak for the S&P 500 and Nasdaq that coincided with a tightening of election polls. Mr Trump is viewed as a wildcard by markets because of his unpredictability and broadsides against the Federal Reserve, free trade and other targets.
The Dow Jones Industrial Average gained 2.1 per cent to 18,259.60.
The broad-based S&P 500 rose 2.2 per cent to 2,131.52, its largest single-day gain in eight months, while the tech-rich Nasdaq Composite Index advanced 2.4 per cent to 5,166.17.
MSCI's all-country world index was last up 1.6 per cent, its best day since June 29. The index had closed at a four-month low on Friday. Europe's index of the leading 300 shares closed 1.7 per cent higher, its strongest rally in nine weeks, with a 2.9 per cent rise in financials leading the way.
One of the biggest winners was the Mexican peso, which has been a market proxy for sentiment over the US election and has performed in inverse correlation with Mr Trump's perceived chances of winning the White House. The Republican candidate's proposed policies are considered a negative for Mexico's economy. The currency rose as much as 2.55 per cent to a 1-1/2 week high of 18.5457 per US dollar.
The US dollar jumped 0.69 per cent against a basket of currencies after a 1.3 per cent drop last week.
The shift in sentiment was reflected by the steep fall in anticipated market volatility. The VIX index, also known as Wall Street's "fear gauge", was on track to post its biggest one-day fall in over four months and was poised to snap a nine-day stretch of gains.
Gold, which also rose every day last week to a one-month high above US$1,300 an ounce, fell 1.8 per cent, its biggest drop since Oct 4, to US$1,280.94.
Bond prices retreated as risk appetite surged across the board. Benchmark 10-year notes were down 13/32 in price to yield 1.8279 per cent, up from 1.783 per cent late on Friday.
Earlier in Europe, Frankfurt and Paris both posted gains of 1.9 per cent, with London, up 1.7 per cent, not far behind.
Mr JJ Kinahan, chief market strategist at TD Ameritrade, said the extent of the rally was surprising and suggested some investors had oversold. He said uncertainty about the election result remains, despite stock gains.
"It's hard to believe that without any results (except for early voting) the world's suddenly a happy place and there's no risk any more," Mr Kinahan said.