Investors suddenly became much more confident that Hillary Clinton will prevail over Donald Trump for a status quo outcome in the U.S. presidential campaign -- a Democrat in the White House reined in by Republicans in Congress.
Option bets on where the S&P 500 Index will be on the day after Tuesday’s vote suggest Hillary Clinton has 71 percent chance of winning, up from 63 percent last week, Janus Capital Group Inc. said in an e-mail. That leaves investors more aligned with prediction-market gamblers and polling-aggregator forecasts, which mostly give her better odds.
The Janus analysis was consistent with market moves after the Federal Bureau of Investigation reaffirmed on Sunday that it won’t seek criminal charges related to Clinton’s e-mail practices. The S&P 500 broke its longest losing streak in 36 years and regained most of what it had lost since the FBI reignited the e-mail controversy on Oct. 28. That news had driven safer assets up and riskier ones down -- hedges against a Republican upset that were all dialed back on Monday;
The aftermath of a come-from-behind Trump victory would be similar to the fallout from the U.K.’s June vote to leave the European Union. “We envision a violent flight to quality” if Trump wins, Barclays Plc said in a report. A Democratic sweep may also be disruptive, but that’s now a remote possibility. JPMorgan Chase & Co. raised a third potential surprise in a report that might produce a similar reaction. The title: “I demand a recount.”
Over the longer term, both candidates want to increase spending and cut taxes, which would be bullish for stocks and bearish for fixed income. Below is a look at potential winners and losers. But first, a caveat. Investors’ immediate reaction to U.S. elections often doesn’t last,
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