Global stock markets and the U.S. dollar took a dive on signs the U.S. presidential election is becoming an increasingly tight race between Democrat Hillary Clinton and Republican Donald Trump.
World investors for weeks have been betting that Clinton would win comfortably as polls consistently showed her several points ahead of Trump. But those polls have narrowed significantly since last week's announcement that the FBI is looking into more e-mails that could be connected to its investigation of Clinton's e-mail practices. One poll on November 1 showed Trump pulling ahead of Clinton for the first time in months.
The uncertainty about the outcome of the November 8 election sent stocks plunging on Wall Street on November 1, driving Standard & Poor's 500 index to a four-month low as major U.S. stock indexes across the board lost at least 1 percent of their value.
The anxiety spilled over in end-of-day trading in Europe and the open of trading in Asia on November 2, with Frankfurt's main index losing 1.3 percent, Paris's stock benchmark falling 0.9 percent, and Japan's Nikkei index dropping 1.1 percent.
The U.S. dollar plunged to a three-week low against the euro and lost nearly 1 percent against other major currencies while investors worried about a period of political tumult in the United States stashed their funds into gold and other safe havens.
"The markets have built in a Hillary victory, and a Trump victory is going to roil the markets," Paul Nolte, portfolio manager at Kingsview Asset Management, told Reuters. "And that's why we're seeing the market sell off here, because some of the poll numbers have tightened up over the last week."
An ABC News/Washington Post tracking poll on November 1 found Trump edging ahead of Clinton by one point for the first time since May, but most other polls showed Clinton still ahead, though by a reduced amount.
An average of all nationwide polls calculated by Realclearpolitics.com showed Clinton remained in the lead by 2.2 percentage points early on November 2.
But in critical battleground states like Ohio and Florida Trump has overtaken Clinton by substantial margins, polls show.
An index of volatility in Wall Street stocks, which is considered a measure of market fears, briefly climbed above 20 for the first time since Britain voted in June to pull out of the European Union -- another period of global market tumult.
"Trump appears to be the 'Black Swan' candidate, while Clinton is the expected winner based on current polls," said Michael A. Gayed, a U.S. money manager, who is one of many who say global markets have been expecting a "status quo" election with Clinton winning and carrying on most of President Barack Obama's established policies.
"If the market has indeed priced in a Clinton presidency, it stands to reason that a period of significant volatility and readjustment could occur" in global markets if Trump pulls off an upset and wins, Gayed said.