US election: Big FTSE 100 trades as America votes

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Americans have begun arriving at polling stations to vote in what is without doubt the ugliest election campaign in US history. Thankfully, it should all be over in less than 24 hours, perhaps as early as 4am our time, barring any legal challenge or political horseplay. Then the fun really begins.

Assuming there's a clear winner and the result is called at the first opportunity, Asian markets get first shot at pricing in the outcome. And this is a binary bet for equity markets - Clinton good, Trump bad.

We've already discussed the likely impact on financial markets in detail elsewhere today, but it's essentially "run for the hills" time if Trump gets elected. A Clinton presidency, meanwhile, could easily trigger a relief rally, which could tee us up for a retest of record highs, both here and in the states, by year-end.

How significant the winner is to equity prices became clear last week when a fresh FBI probe into Clinton's personal emails when secretary of state threatened her campaign. Trump went ahead in the polls briefly, sending the S&P 500 down by over 3% in a nine-session losing streak. The FTSE 100 plunged by as much as 5%.

An FBI decision to end its investigation this weekend reinvigorated the Democrats and markets rejoiced. An historically Republican Wall Street surged by 2% and London reclaimed 113 points.

Currently, a poll of polls compiled by American media group RealClearPolitics shows Clinton ahead by 3.2% with 46.8% of the vote versus Trump on 43.6%. It's 48%-44%, according to the BBC. Spreadbetter IG Group's election barometer has the chance of a Clinton win at 80%. It's a sure thing, right?

If Clinton wins, the FTSE 100 will almost certainly test, and quite possibly break back above the downtrend from the April 2015 high, currently at around 6,918. It's a trendline where technical resistance over the summer quickly turned to support following a breakout at the beginning of last month, ending in a record high.

But even with Clinton in the lead on polling day, investors are reluctant to commit extra cash to equities Tuesday, just in case. A Brexit-style shock remains a possibility, although it is increasingly unlikely.

"Whether Clinton or Trump wins the keys to the White House, there will be risks to avoid and major financial opportunities from which to take advantage. But for now, only the brave would take major positions each way," says Nigel Green, founder and CEO of deVere Group, a financial consultancy.

And it certainly seems that way as America wakes up on an historic day. It's why the FTSE 100 made only modest gains Tuesday morning within a tight range, and trades flat at lunchtime.

Company results have been behind any big moves. AB Foods tops the leaderboard with a 5% rally after adjusted operating profit rose 5% in the past year to £1.12 billion. It also thinks changes to trade tariffs and UK agricultural policy post-Brexit, and a weak pound, could be good for the Primark and Ovaltine firm.

However, gains have been far more modest elsewhere, and Steve Rowe's ruthless restructuring at Marks & Spencer has triggered a mini sell-off. Despite better-than-feared results from the clothing and home business in the first half, it still doesn't solve the problem of poor sales of women's clothes, and M&S shares fell over 5% at one stage.

Imperial Brands has run out of puff, too, after boss Alison Cooper announced a further £300 million of investment to "support the delivery of further quality revenue growth in 2017", paid for by cost-cutting. The shares fell over 4% despite inline full-year numbers.

And domestic plays like housebuilders Barratt Developments, Persimmon and Taylor Wimpey have been sold off Tuesday. Banks, meanwhile, are seeing profit-taking, with Royal Bank of Scotland, HSBC and Barclays in the red.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.