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Sunday, October 22, 2017

(Reuters) – Democrat Hillary Clinton and Republican Donald Trump traded barbs and accusations Monday night in the first debate between the two ahead of the Nov. 8 U.S. presidential election.

Financial market participants followed the event closely, and markets were on the move throughout. U.S. equity index futures turned from modestly negative as the event began to a gain of more than 14 points by early Tuesday morning.

In currencies, the Mexican peso was a big mover, gaining more than 1.7 percent against the dollar during the event. It has been dubbed the “Trump thermometer” because of his campaign pledge to build a wall along the border with Mexico to prevent illegal immigration and to renegotiate the North American Free Trade Agreement.

Following is a compilation of reaction to the debate from investors, economists and financial market analysts.

FACTBOX: Swing states that may determine the election: http://reut.rs/1UhE642

MORE COVERAGE: cpurl://apps.cp./cms/?pageId=us-2016

COMMENTS:JACK ABLIN, CHIEF INVESTMENT OFFICER AT BMO PRIVATE BANK IN CHICAGO:

“Investors celebrated that Hillary didn’t lose. Market trading higher and the peso is strengthening.”

“Hillary came through the debate unscathed. Trump spent more time on the defensive.” BRIAN JACOBSEN, CHIEF PORTFOLIO STRATEGIST, WELLS FARGO FUNDS MANAGEMENT, MENOMONEE FALLS, WISCONSIN:

“I’m not sure I learned anything new listening to the debate. Neither candidate imploded, but based on the strengthening of the Mexican Peso during the debate, I think this round goes to Clinton.”

RANDY FREDERICK, MANAGING DIRECTOR, TRADING AND DERIVATIVES, CHARLES SCHWAB, AUSTIN, TEXAS:

“The Positive reaction in the (equities) futures markets probably implies that Hillary Clinton was perceived as the winner. The market is often said to dislike uncertainty, and most experts seem to consider Donald Trump as the more uncertain candidate. Things could certainly change by morning, and a downturn in the futures between now and morning would likely imply an overnight shift in favor of Trump. I would be surprised to see that.”

PETER KENNY, SENIOR MARKET STRATEGIST, GLOBAL MARKETS ADVISORY GROUP, NEW YORK:

“Both futures and the Mexican peso are accurate indicators of how markets interpreted the debates. Both moved only modestly but both also moved in tandem – higher. I believe that investors pricing in the odds of either candidate winning. Modest positive moves suggest that the Clinton campaign both managed expectations and delivered on beating them. The fear for investors was that she would either; have some physical issue, look weak or have an excuse for one or both. She looked sharp, on point and clearly delivered on a message and style that reassured markets. The Mexican peso’s rise in the time frame of the debate underscores that. The Mexican peso has risen but largely fallen in lock step with the perception of (Clinton’s) prospects for obvious reasons given (Trump’s) take on NAFTA.”

“I would suggest that the moves in both instruments were only modest but that we may see equity markets attempt at a reversal from today’s drubbing. If that occurs, it will likely have a short shelf life.”

BRIAN BATTLE, DIRECTOR OF TRADING, PERFORMANCE TRUST CAPITAL PARTNERS, CHICAGO:

“Debate really was not outside expectations. Trump was Trump and Clinton kept calm and seemed bemused.

“It was underwhelming on policy and there were no gaffes, or revelations. It was a personality debate, not a policy discussion.”

AARON JETT, VICE PRESIDENT, GLOBAL EQUITY RESEARCH, BEL AIR INVESTMENT ADVISORS, LOS ANGELES:

“The market wants Hillary to win. The better she does (or the worse Trump does) the better the market will do in the short term. She did well enough to sustain the market for now. She did fine and Trump rambled on at times making her look better. We should gain back some of what we lost on Monday.”

J.J. KINAHAN, CHIEF STRATEGIST, TD AMERITRADE, CHICAGO:

“It is interesting that in a debate that was so full of negatives from both sides, the result in the Stock Index Futures was very positive. I guess it does show that some positives can come from an absolute free for all. I don’t know that we learned much about the candidates but the market definitely liked it. Don’t forget in the middle of this we also had some numbers showing slightly better growth than previously expected and that also helped the last 5 points or so in the futures rally.

“Finally after a weak day some of this may just be people covering their risk overnight. We did see the Mexican peso rally during the debate although it has been much weaker over the last few weeks as the rhetoric did not seem as strong as we have seen earlier.”

MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ, NEWPORT BEACH, CALIFORNIA:

“While both candidates spoke to the importance of higher economic growth whose benefits are shared more broadly, the debate highlighted their different approaches to tax policies and what ultimately delivers greater prosperity.”

HUGH JOHNSON, CHAIRMAN AND CHIEF INVESTMENT OFFICER, HUGH JOHNSON ADVISORS, ALBANY, NEW YORK:

“Both presented different views on reviving the economy. Secretary Clinton’s tax and spending plans were well articulated and well thought out. Trump’s thoughts that included significant tax cuts and implicit promises of infrastructure spending were emotionally appealing but not nearly as well thought out or economically sensible. Each will appeal to different sets of voters. A good example of Trump’s emotional, yet uninformed, thoughts were his comments (a) that the recovery was the ‘worst’ ever, (b) that Janet Yellen was political, (b) the rise in stock prices has been a bubble that would ‘burst’ if interest rates were increased.

“In my view Ms Clinton presented herself as being far more informed and presidential while Trump presented himself as being quite uninformed but emotionally appealing. I would be inclined to give Secretary Clinton a modest edge although Trump did a good job presenting himself as the candidate of change.

“Her stamina answer was a real good – close to a clincher.”

JEFFREY GUNDLACH, CHIEF EXECUTIVE, DOUBLELINE CAPITAL, LOS ANGELES:

“It’s the establishment versus the anti-establishment. No one ‘wins’ a debate in September. Trump did himself a little bit of good, and set up the later debates to his advantage.”

DAN IVASCYN, GROUP CHIEF INVESTMENT OFFICER, PIMCO, NEWPORT BEACH, CALIFORNIA:

“We continue to believe a Clinton victory will be the most likely outcome. Nothing tonight to change that view.”

MARKET REACTION:

STOCKS: S&P 500 emini futures gained ground over the course of the debate, with the contract price moving from down 5 points as the event began to up 14 points by early Tuesday morning, a few hours after it finished.

BONDS: 2- and 10-year Treasury yields rose modestly

FOREX: The Mexican peso gained 1.7 percent against the dollar. The dollar index, meanwhile, was little changed as were exchange levels against the yen and euro

(Americas Economics and Markets Desk; +1-646 223-6300)

Photo: Republican U.S. presidential nominee Donald Trump is accompanied by his relatives, including his wife Melania (2nd from L) at the conclusion of the first debate with Democratic U.S. presidential nominee Hillary Clinton at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Brian Snyder