US election uncertainty hits stocks; pound rallies

Traders work on the floor of the New York Stock Exchange in New York, US on Sept 6, 2016.
Traders work on the floor of the New York Stock Exchange in New York, US on Sept 6, 2016. PHOTO: BLOOMBERG

NEW YORK (AFP) - Wall Street stocks fell for the eighth straight session Thursday (Nov 3) on US election jitters, while the pound rallied after a British court ruling threw the government's Brexit plan into doubt.

US stocks continued their retreat as election polls show Democrat Hillary Clinton clinging to a narrow lead over Republican Donald Trump, who is seen by markets as an unpredictable wildcard.

Both the S&P 500 and Nasdaq ended lower for the eighth straight day, while the Dow dropped for the sixth straight session.

In Britain, the pound jumped against the dollar and euro after the High Court in London ruled that parliament must approve the start of Britain's withdrawal from the European Union.

Sterling - which had tumbled to multi-year lows against main rivals since Britain voted June 23 for Brexit - surged above US$1.24, its highest level in nearly one month.

The pound's jump though weighed on London stocks, which had racked up gains as the weak currency benefitted exporters. The FTSE 100 closed down 0.8 percent.

Also helping the currency, the Bank of England hiked its economic growth forecast for next year and froze its key interest rate at a record-low 0.25 percent and left stimulus unchanged.

Elsewhere in Europe, Frankfurt stocks shed 0.4 percent while Paris dipped 0.1 percent.

US stocks opened higher after a New York Times/CBS News poll of likely voters showed Clinton with a three-point lead.

However, US equities steadily retreated throughout the session. Many investors believe the market has not fully priced in the possibility of a Trump win, which is seen as potentially leading to radical changes in US policies, including trade and monetary policy.

"This election is causing jitters for investors," said Jack Ablin, chief investment officer at BMO Private Bank.

"An increasing number of investors would prefer to watch this election from the sidelines and not have the full exposure that they've got."

Signs of nervousness showed in the Vix volatility index, which measures market fear. The index vaulted about 14 per cent Thursday to 22.08, the highest level since it hit 25.76 after Britain's shock vote in June to exit the European Union.

"Markets have reacted with cautiousness to political uncertainty that is seemingly flying in on multiple fronts," said CMC Markets analyst Jasper Lawler.

In other markets, the rush for safety saw gold prices climb back above US$1,300 an ounce Wednesday for the first time since the start of October.

Egypt's pound plunged in value as the central bank floated the currency to address a dollar crunch that threatened to cause some imports to grind to a halt.

The dollar was trading on official markets at between 13.5 and 14 Egyptian pounds, according to several banks contacted by AFP, up sharply from the previous rate of 8.8.