• Reuters

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Investors and traders in Asia indicated on Monday they are mostly increasing their bets on Democratic nominee Hillary Clinton winning the U.S. presidential race after the second of three debates with Republican party nominee Donald Trump.

Some, though, remain cautious, saying there was still a chance of a surprise Trump win. They said many in the markets were wary after being burned by the shock Brexit vote in June.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged up around 0.1 percent by midafternoon in Singapore on Monday, while Wall Street index futures were little changed after Clinton exchanged barbs with Republican party nominee Donald Trump in the televised event, which was shown live across trading rooms during Asia’s morning.

The 90-minute debate quickly turned into an acrimonious discussion of a 2005 video that emerged on Friday in which Trump was heard using vulgar language and talking about groping women. The controversy has caused some senior Republicans to withdraw their support for him.

“For those that think that Trump has a very, very low chance of winning the U.S. elections it might be a good time to go long on global equities,” said Itay Tuchman, Citi’s head of markets for Australia and New Zealand.

Markets could be prematurely pricing in a Clinton victory, as they did during the Brexit vote in June, when the United Kingdom voted unexpectedly to leave the European Union, said Lee Jin Yang, research analyst for Aberdeen Asset Management in Singapore.

“We need to remember that Brexit only became a key focus one week before the vote. The market had priced in near zero probability of it happening, but it did.”

According to a CNN online poll, Clinton won the debate by 57 percent to 34 percent.

But Josh Crabb, head of Asian equities at Old Mutual Global Investors in Hong Kong, said he is wary of such polls — especially after Brexit.

“The way that mainstream media, and a lot of commentators, interpret the outcome of the debate may be different to what the voting public in general takes away,” Crabb said. “That is a concern because often, a lot of these polls have not been quite as accurate as people are expecting.”

Mathan Somasundarum, a strategist at stock brokerage Baillieu Holst in Sydney, said a Clinton victory would reduce the risk of the United States adopting a strong trade protectionist policy. Trump has been highly critical of the NAFTA trade deal with Mexico and Canada as well as the Trans-Pacific Partnership, which has yet to be ratified by the U.S. Congress. He has promised to build a border wall and make Mexico pay for it.

“I would expect the U.S. dollar to weaken and you would expect then there is some pressure coming off emerging markets, and then commodities, which (are a) proxy for emerging markets,” Somasundarum said. “China, commodities and the Aussie dollar should do better.”

While the markets had already begun to price in a Clinton victory even before the Republican party’s crisis over Trump’s 2005 remarks, some are beginning to game out what would happen if the Democrats won both houses of Congress, which are now Republican-controlled.

The possibility of the Democrats controlling Congress and the White House is a concern to some in the markets as they see it leading to more regulation of businesses and higher taxes.

“Over time, people will start thinking, is this going to mean a big difference in the way taxation works? Is it going to mean more government involvement?” said Crabb at Old Mutual Global in Hong Kong. “But the immediate reaction will be a relief rally.”

Angus Gluskie, managing director of White Funds Management in Sydney, said while markets usually view one party dominating the government as a risk, it could be different this time.

“Investors have been disappointed by the political stalemate over recent years, which has prevented meaningful and well-needed changes being pursued,” Gluskie said.

Steven Friedman, senior investment strategist at BNP Paris based Investment Partners in New York, said he saw little in the debate that represented a game-changer for either candidate. “This obviously plays to Clinton’s advantage, given her lead in the polls,” he said.

Strategists in a recent Reuters equity poll mostly viewed an election victory on Nov. 8 by Clinton as more positive for the stock market through the end of the year, largely because her positions — unlike her opponent’s — are well-known.

Chris Brankin, chief executive at stock brokerage TD Ameritrade Asia, said he thought Trump was much better prepared for the town hall debate in St. Louis than he was for the first debate, and that could give markets some pause.

“I have always said markets ‘know what they get’ with Hillary, as she as always been seen as pro-Wall Street and Trump is a bit of an unknown for investors.

“After tonight’s debate I still think there are a lot of questions as who will be elected into office next month and markets are probably going to remain range-bound till after the U.S. elections.”

Sterling fell again on Monday, after largely recovering from Friday’s “flash crash,” while the Mexican peso and U.S. stock futures rose as investors saw less chance of Republican nominee Trump winning next month’s presidential election.

The pound dropped half a percent against a dollar boosted by expectations the Federal Reserve will raise interest rates in December even after slightly weaker than expected jobs data on Friday.

The U.K. currency last stood at $1.2402, down 0.2 percent. Its trade-weighted index fell 0.7 percent to its lowest since early 2009.

“I guess that we have to prepare for further weakness,” said Hans Redeker, head of G10 currency strategy at Morgan Stanley in London.

In early Asian trade on Friday, it fell 20 percent to a three-decade low of $1.1491 in minutes as a fall on investor concerns over Britain’s impending exit from the European Union snowballed as automated computer trades were triggered.

Britain’s FTSE 100 fell 0.1 percent but outperformed other major European stocks as the internationally focused companies on the index gain on overseas revenues and competitiveness when the pound fall.

The more domestically focused FTSE 250 index was down 0.2 percent and British 10-year government bond yields rose 1.3 basis points to 0.992 percent.

The pan-European STOXX 600 index fell 0.4 percent. One of the leading fallers was Deutsche Bank, down nearly 3 percent after Chief Executive John Cryan failed to secure a speedy deal with the U.S. Department of Justice over the weekend over the mis-selling of mortgage-backed securities.

For Reuters’ new Live Markets blog on European and U.K. stock markets see reuters://realtime/verb=Open/url=emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

Another notable mover on currency markets was the Mexican peso, which at one point was up 2 percent at 18.91 to the dollar as Trump’s chances of winning the White House seemed diminished after the second pre-election debate with Clinton.

Trump has vowed to build a wall on the border with Mexico and renegotiate or scrap the North American Free Trade Agreement (NAFTA) if he is elected, making the peso somewhat of a barometer of his chances. The Mexican currency was last up 1.9 percent at 18.96 per dollar.

A CNN/ORC snap poll of debate watchers found that 57 percent thought Clinton won the encounter, versus 34 percent for Trump.

U.S. stocks index futures were up about 0.2 percent, suggesting Wall Street will open higher. U.S. stock markets are open on Monday, though the bond market is closed for the Columbus Day holiday.

Earlier, Asian shares eked out minor gains. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.1 percent. Japanese markets were closed for a holiday.

Chinese shares racked up their biggest gains in two months as investors returned from a week-long holiday and caught up with gains on global markets.

China’s yuan, however, hit a six-year low against the dollar before recovering. The People’s Bank of China set the weakest fix for currency since September 2010 and in the spot market fell as low as 6.7051, also its lowest since September 2010.

It last traded at 6.7025, down just 0.03 percent on the day.

Oil prices fell, with investors skeptical an agreement among members of the Organization of the Petroleum Exporting Countries (OPEC) to cut output would have a major impact.

Brent crude, the international benchmark, was down 18 cents at $51.73 a barrel.

“A meeting between OPEC and non-OPEC producers (namely Russia) will add to oil headlines this week. Don’t expect a firm agreement from Russia, but headlines about cooperation are likely,” Morgan Stanley said.

Gold last traded at $1,263 an ounce, up 0.6 percent, lifted by demand from returning Chinese investors.

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