Donald Trump's promises to spend on infrastructure and cut taxes have led to warnings of a surge in inflation that would force the Fed to hike rates to cap prices
New York (AFP) - Stock markets spiralled downwards Wednesday around the globe as investors fretted over the rising chances that maverick tycoon Donald Trump could win the US presidency in next Tuesday's election.
Leading equity markets in Asia and Europe tumbled more than one percent, while the broad-based S&P 500 also pulled back, along with the dollar.
Gold prices, seen as refuge in times of uncertainty, continued to climb, adding 0.8 percent to $1,297 an ounce.
"With less than a week to go, market opinion is coming to the conclusion that a Trump win would create too much uncertainty and is bad for risk sentiment generally," said Societe Generale analyst Kit Juckes.
Leading political observers still view Democrat Hillary Clinton as the front-runner to win the November 8 vote, in part because she enjoys leads in many of the key swing states that will determine the election.
The former secretary of state is considered by most investors to be a safer, more stable bet than Trump, who is seen as a loose cannon.
But polls have showed Trump gaining ground over the last week, a shift from mid-October, when Clinton's sizeable lead seemed to assure her victory.
Some investors see the potential for a shock result akin to Britain's June vote to exit the European Union, which was not foretold by opinion polls.
"The Trump risk is in revival," said Chihiro Ohta, a Tokyo-based senior strategist at SMBC Nikko Securities Inc.
"With Trump, there always follows an uneasiness over whether policies will be managed properly in the US."
Equity markets in Tokyo, Hong Kong, London, Paris and Frankfurt all fell between 1.0 and 1.8 percent.
In the US, the S&P 500 shed 0.7 percent, in part due to weakness in petroleum-linked shares after a big jump in US oil inventories revived fears about a supply glut.
- Dollar mostly weaker -
US markets largely shrugged off an expected decision by the Federal Reserve to keep interest rates unchanged, while leaving the door open to a rate hike in its next meeting in December.
The dollar fell against most currencies, in part because some think the Fed would delay raising rates if Trump were to win.
A December rate hike "could also be thrown into uncertainty in the event of a Trump victory next week, given that central bankers would likely have less visibility into the policy outlook under a Trump presidency," said Omer Esiner, analyst at Commonwealth Foreign Exchange.
The Mexican peso also lost ground again, moving to 19.36 pesos per dollar from 18.85 late on Tuesday.
The peso has steadily fallen as Trump has gained due to his anti-Mexican rhetoric, including a pledge to remove undocumented migrants, build a wall along the border and tear up a US trade deal with its neighbor to the south.
- Key figures around 2100 GMT -
New York - Dow: DOWN 0.4 percent at 17,959.64 (close)
New York - S&P 500: DOWN 0.7 percent at 2,097.94 (close)
New York - Nasdaq: DOWN 0.9 percent at 5,105.57 (close)
London - FTSE 100: DOWN 1.0 percent at 6,845.42 (close)
Frankfurt - DAX 30: DOWN 1.5 percent at 10.370.93 (close)
Paris - CAC 40: DOWN 1.2 percent at 4,414.67 (close)
EURO STOXX 50: DOWN 1.4 percent at 2,980.17 (close)
Tokyo - Nikkei 225: DOWN 1.8 percent at 17,134.68 (close)
Hong Kong - Hang Seng: DOWN 1.5 percent at 22,810.50 (close)
Shanghai - Composite: DOWN 0.6 percent at 3,102.73 (close)
Euro/dollar: UP at $1.1095 from $1.1056 Tuesday
Dollar/yen: DOWN at 103.42 from 104.12
Pound/dollar: UP at $1.2290 from $1.2241
Euro/pound: DOWN at 90.28 pence from 90.32 pence
Oil - West Texas Intermediate: DOWN $1.33 at $45.34 per barrel
Oil - Brent North Sea: DOWN $1.28 at $46.86 per barrel