European shares give back gains, emerging markets stay higher Global market volatility had biggest drop since July on Monday Share on Facebook Share on Twitter Futures on the S&P 500 Index slipped, European shares pared an advance and Treasuries eked out gains pointing to investor caution before the U.S. presidential election, with opinion polls showing Hillary Clinton narrowly ahead of Donald Trump. Stock markets traded in narrow ranges after U.S. equities jumped the most in eight months on Monday, following the Federal Bureau of Investigation’s decision to exonerate Clinton’s use of e-mails while secretary of state. Better-than-estimated earnings pushed Credit Agricole SA higher, while the yen weakened and emerging markets climbed. “The market is actually on hold and awaiting the election outcome,� said Benno Gallicker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “Everybody is preparing themselves for tomorrow. The market is undecided, just like the U.S. electorate.� Stocks turned cautious after rallying around the world on Monday and continuing their gains through trading in Asia Tuesday. Trading patterns suggest that investors are likely to turn more circumspect if Trump wins the vote -- global equities slumped last week and haven assets rallied after the FBI said on Oct. 28 that it had reopened a probe into Clinton’s communications, potentially damaging her election chances. The results are due to be announced during morning trading in Asia on Wednesday. For a guide on what to watch after voting closes, click here. S&P 500 Index futures slipped 0.2 percent as of 7:25 a.m. New York time, while the Stoxx Europe 600 Index was little changed after rising as much as 0.3 percent. The U.S. 10-year Treasury note yield fell one basis point to 1.82 percent. Japan’s yen slipped 0.3 percent to 104.80 per dollar. Stocks Companies on Europe’s Stoxx 600 were evenly split between those rising and falling, while volumes were around 16 percent lower than the 30-day average. Credit Agricole limited losses among banks, rising 4.9 percent after the French lender said quarterly profit doubled from a year earlier and bond-trading income surged. ArcelorMittal slid 6.6 percent after reporting lower-than-forecast earnings, and warning that profitability would fall in the last three months of the year amid a decline in U.S. steel prices and a surge in coking coal prices. Priceline Group Inc. rose 5.1 percent in premarket New York trading after third-quarter earnings excluding writedowns beat analyst estimates. The MSCI Emerging Markets Index rallied in Asian trading hours, advancing 0.7 percent, and poised for the steepest two-day gain in six weeks. Equity benchmarks in the Philippines and Indonesia climbed more than 1.5 percent. Saudi Arabian stocks advanced toward their highest close in three months as the government said it will make delayed payments to local contractors before the year end. Egyptian shares extended their world-beating November rally, rising for a ninth day, as the pound’s float lured foreign institutions back to the nation’s assets. Currencies The yen weakened for a third day. The Japanese currency would probably strengthen to 99.50 within 24 hours of a Trump victory, and slip to 105.25 if Clinton wins, according to Scott Petruska, a Newton, Massachusetts-based senior adviser at SVB Financial Group. “Although we have seen an improvement in risk appetite over the past 24 hours, markets remain wary of an election shock,� said Rodrigo Catril, a currency strategist at National Australia Bank Ltd. in Sydney. “A dollar-positive reaction is likely on news of a Clinton victory; a likely ‘risk off’ reaction to a Trump victory would mean dollar losses versus yen, Swiss franc and euro but gains elsewhere.� Mexico’s peso swung between gains and losses after rallying 4.2 percent over the previous three trading sessions. Nomura Holdings Inc. says the currency is likely to sink to 25 by year-end in the event of an election victory for Trump, who has said he will end or renegotiate the North American Free Trade Agreement that governs trade between Mexico and the U.S. The peso’s overnight implied volatility jumped to the highest level since October 2008. The JPMorgan Global FX Volatility Index was little changed, after falling on Monday by the most since June. Commodities Gold erased earlier gains of as much as 0.3 percent to trade at $1,280.44 an ounce. It surged 2.3 percent last week as opinion polls indicated Clinton’s lead over Trump was narrowing. Crude oil was little changed at $44.71 a barrel in New York as OPEC’s predictions of stronger demand balanced signs of mounting U.S. stockpiles. Nickel advanced 0.5 percent in London to $11,185 a ton. The market faces a second year of shortage in 2017 as contracting ore shipments from the Philippines prompt China to trim output, according to Sumitomo Metal Mining Co., Japan’s top producer. Copper, zinc and aluminum slipped at least 0.6 percent. Bonds While Treasury 10-year yields are hovering around 1.8 percent, a win for Clinton will probably send them to about 2.6 percent by this time next year, according to Loomis Sayles & Co. Vice Chairman Dan Fuss. High-yielding European government bonds held onto gains made on Monday. Yields on Italian 10-year debt were down two basis points at 1.685 percent, having fallen five basis points the previous day. Similar-maturity Spanish bond yields were down two basis points at 1.223 percent, having dropped three basis points on Monday.

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