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Stocks increase, Treasuries consistent as markets brace for US vote

World stocks rose and Treasury yields rebounded on Tuesday while an index of market volatility pulled away, as markets awaited early indications of the outcome of the knifeedge U.S. presidential election, with only currency markets showing some jitters.

Over night indicated volatility options for euro/dollar increased to the greatest level considering that November 2016, as did those for the dollar-Mexican peso set, in acknowledgment that the latter could be hard struck by protectionist policies if Republican Donald Trump beats Democrat Kamala Harris.

The VIX index of U.S. stock volatility, known as Wall Street's worry gauge, hovered at 20.6, down 6% from Monday but up from 15 in September. That said, it stays at half the level seen in the 2020 governmental election in an indication that markets stayed reasonably sanguine.

The surveys stay neck and neck even as some recent ballot has actually recommended that Harris has gotten the edge, experts at TD Securities said. Forecast markets have swung hugely on the updated ballot, but a Red Wave remains the most likely outcome priced into markets followed by Democratic President and split Congress.

MSCI's gauge of stocks across the globe climbed up 0.9%. On Wall Street, the S&P 500 Index rose 1%,. the Dow Jones Industrial Average added 0.9%, and the. Nasdaq Composite jumped 1.3%.

The 10-year Treasury yield pared earlier gains. to stand at 4.3110%, pulling back from a four-month-high struck. last week.

Yields spiked greater earlier even as financiers commonly expect. the Federal Reserve to cut interest rates by 25 basis points. when policymakers meet today. The dive in yields followed. data from the Institute for Supply Management that revealed U.S. services sector activity all of a sudden accelerated in October to. a more-than-two-year high, as employment reinforced.

The two-year Treasury yield included 3.6 bps to. 4.2138%, likewise near a three-month-high hit recently.

Investors are braced for turbulence in the Treasury market,. even enabling the huge relocations that we've currently seen in it. just recently, stated John Higgins, primary markets economic expert at Capital. Economics. The choppiness is not surprising, he said, given the. contrast in the lead characters' policy platforms.

In general, investors have interpreted Trump's trade. policies to be more protectionist and inflationary.

The 10-year Treasury yield has actually climbed 63 basis points

considering that the Federal Reserve cut rates of interest by 50 basis. points on Sept. 18.

Europe's benchmark STOXX index was flat, while. MSCI's broadest index of Asia-Pacific shares outside Japan. rose 0.9%.

Currencies, which unlike shares trade around the clock, saw. more action, albeit offering only scattered and contradictory. indications of which prospect investors were betting on.

The dollar, which alleviated as traders made last tweaks to. positions, purchased 151.58 yen and changed hands at. $ 1.0285 per euro.

They have actually priced what they believe is price-able which's. that, stated Westpac strategist Imre Speizer, including that a clear. win for Trump would raise the dollar, while a win for Harris. would push it a bit lower.

Bitcoin added 3.3% to about $70,077, with Trump. seen by analysts as enacting more beneficial policies for. cryptocurrencies than Harris.

Eventually the U.S. election comes down to this - whether. the U.S. electorate wants to choose financial policy. connection, institutional stability and liberal democracy. ( Harris) or extreme trade policy, an additional retreat for. globalization and strongman democracy (Trump), J.P. Morgan. experts stated in a note. Simply put, an elect stability or. modification.

BRACED

China is seen on the cutting edge of tariff risk and its. currency in particular is trading on tenterhooks with indicated. volatility against the dollar around record highs.

The yuan hovered at 7.1047 per dollar, while. Chinese stock exchange surged to nearly one-month highs as. investors expect a conference of top policymakers in Beijing this. week to authorize city government debt refinancing and costs.

China's blue chip CSI300 jumped 2.5% and Hong. Kong's Hang Seng increased 2.1%.

The Australian dollar hardly reacted after the reserve bank. held rates, as anticipated, with all eyes on the U.S. election, and. the Aussie was last partially firmer at $0.6614.

Euro zone bond yields edged up, with Germany's 10-year bond. yield climbing nearly 4 basis indicate 2.431%, a. bit below last week's three-month high of 2.447%.

Oil held sharp overnight gains on delays to manufacturers' strategies. for increased output, leaving benchmark Brent crude futures. at $75.36 a barrel after a 3% rise on Monday.

When U.S. election results roll in after midnight GMT, the. focus will be on the battlefield states of Georgia, North. Carolina, Pennsylvania, Michigan, Arizona, Wisconsin and Nevada.

A winner may not be understood for days, and Trump has actually signified. that he will try to fight any defeat, as he did in 2020.

(source: Reuters)