World stocks: Investors panic as US presidential debate looms

European and Asian shares retreated on Monday as investors waited to see how Donald Trump would fare in a United States presidential debate against Hillary Clinton, while oil prices firmed before an informal OPEC meeting.

Half of America’s likely voters will rely on the presidential debates to help them make their choice between Republican Trump and Democrat Clinton in the Nov. 8 election, according to a Reuters/Ipsos poll released on Monday.

“A good performance from Mr. Trump could see market volatility increase, particularly if investors think there is a possibility that he could actually win,” wrote Michael Hewson, chief market analyst at CMC Markets in London.

European stocks fell, dragged down by a pullback in the shares of major banking and energy companies, and tracking Wall Street’s fall on Friday.

The pan-European STOXX 600 index fell 1.4 percent and remains down by around 7 percent since the start of 2016.

“The overwhelming driver for stock markets in recent weeks has been expectations of central bank policy,” said Investec economist Philip Shaw.

“But as the U.S. elections are moving into a closer market horizon, the tendency of U.S. political events to influence global markets will probably rise,” he said.

Oil prices rebounded after Algeria’s energy minister said on Sunday that all options were possible for an output cut or freeze at this week’s informal meeting of OPEC producers. Brent crude was up 24 cents to $46.13 by 0928 GMT LCOc1.

“The Wall Street fall on Friday seems to be at least as much to do with oil prices as it is with (the possible election of) Donald Trump,” Shaw said.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS extended early losses and was down 0.8 percent, while Japan’s Nikkei stock index .N225 ended down 1.3 percent.

Wall Street logged weekly gains but ended with solid losses on Friday. Still, the S&P 500 managed to record its best weekly performance in more than two months after the U.S. Federal Reserve held interest rates steady on Wednesday.

Monday night’s (0100 GMT) showdown between Trump and Clinton is the first of three debates. Clinton will press Trump to provide more specifics on his policies, two top Clinton campaign aides said.