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Reopened FBI Probe Sends Stocks Tumbling

Secretary Clinton’s Email Sends Equity Benchmarks Lower Despite Better GDP Figures

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Friday’s advance GDP announcement was overshadowed by a report of an investigation into former Secretary of State Hillary Clinton’s use of email to send classified information.  Equities fell across the board, with the Nasdaq Composite leading the way lower.

FBI’s New Email Revelations Sends Risk Assets Lower


With the US presidential election less than two weeks away, the bombshell announcement from the Federal Bureau of Investigation sent risk assets tumbling on Friday, led lower by stock benchmarks.  The FBI announced that it will be reopening a criminal probe into Hillary Clinton’s use of personal email to send classified information, with the focus centered on her campaign Vice Chair Huma Abedin.  The unfolding developments have severely hurt Clinton’s chances of clinching the election, with any additional disclosures likely to throw financial markets back into a tailspin.  Besides the reaction in US equity indices, the Mexican Peso also responded negatively to the development, with USDMXN rising to the highest point since October 7th.  Any further developments related to the investigation and its findings could see the rally in the pair reignited throughout the week.

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Japanese Retail Sales Remain in Contraction


After disappointing data related to inflation and household spending last week, Japanese retail figures reported overnight by the Ministry of Economy, Trade, and Industry showed a continued slide in consumer purchases.  Retail sales shrank by -1.90%, missing expectations of a -1.80% contraction but slightly better than the -2.10% recorded during the month of August.  Industrial production data was also released overnight, displaying output that was unchanged in September after rising 1.30% during the month of August.  With fundamentals showing signs of stress, tomorrow’s interest rate decision from the Bank of Japan will be very important from a guidance perspective.  Additional economic distress could force the Central Bank to rethink its stance towards interest rates and asset purchases.  After strengthening rapidly on Friday following the announcement of the Clinton investigation, the Yen is weakening once more versus the US dollar, climbing back towards 105.00.

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OPEC Exemption Requests Send Crude Lower


Following last week’s tumble back below $50.00 per barrel, West Texas Intermediate oil futures are back on the retreat amid a worsening outlook for the output freeze pledge reached in Algeria.  According to reports, more OPEC member nations are asking for exemptions from the output cuts, adding to the possibility that the deal falls apart.  This comes amid record production from the cartel, which pumped 33.750 million barrels per day during September.  With the group calling for a reduction towards 32.500 million barrels per day, the question remains as to which members will be cutting output to help support oil prices.  With disagreement back on the rise and non-OPEC producers not planning to share in the burden, speculators have reduced their long positions according to the most recent data from the Commodities Futures Trading Commission.  Should any further doubts arise, oil may continue to slide from current levels.

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Spanish GDP Growth Accelerates Despite Government Hang-ups


Gross domestic product figures for Spain reported earlier in the session shows that the Euro Area country continues to make strides in rebuilding the economy despite a fractured government.  Preliminary third quarter figures showed that the economy expanded by 0.70%, with annualized GDP growth printing at 3.20%, slightly below the second quarter’s 3.40% result.  The strong growth figures for Spain come just as the country avoids a third election thanks to an agreement amongst parties to form a government with Mariano Rajoy back at the helm.  Although thousands are demonstrating against his reinstatement amid corruption allegations against the People’s Party, the move ends over 300 days without a government.  Luckily, the economy has surprisingly gained during the period, with the latest inflation figures showing that consumer prices accelerated by 0.70% year over year.  After Friday’s gains, EURUSD is back on the retreat after being unable to close above 1.1000.

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