It’s expected to be a quiet day today – not just because of a horse race in Melbourne, but also because of the much bigger race the world is watching, namely the US election.
Global markets have adopted a brace position as investors wait and see how the US will land the election plane, finally due to land tomorrow (Australian time).
And now I’m out of metaphors. On the local front, the ASX is expected to open lower today ahead of the Reserve Bank of Australia’s (RBA) interest rate decision following a turbulent week abroad, which included a rate announcement from the US Federal Reserve.
Markets grapple with uncertainty
The Dow Jones slipped by 258 points or 0.6%, the S&P 500 fell 0.3% and the Nasdaq closed down 60 points or 0.3% as US share markets grappled with uncertainty ahead of the contest.
The best the markets can deliver is mixed messages about who they think will emerge as the next POTUS.
Shares in the supposed bellwether of Trump’s political fortunes, Trump Media & Technology Group, rose 12.4%.
That said, a surprise poll out of the conservative state of Iowa showed Vice President Kamala Harris in the lead with people over 65, and particularly women.
The Russell 2000 index gained 0.5%, supported by declining bond yields, which lent a boost to small-cap stocks.
The 10-year US Treasury yield saw its largest daily drop in two months, falling 7 basis points to 4.30%, while the 2-year Treasury yield dipped 3 points to 4.17%.
The bond market softened as traders adjusted positions ahead of the election, dampened by concerns over a potential 'Trump trade' fallout.
In other corporate news, Nvidia shares rose 0.5% on news it will replace Intel in the Dow Jones Industrial Average, while Intel fell 2.9%. Energy stocks rallied 1.9% following OPEC+’s decision to extend production cuts.
Currencies and commodities
The energy market reflected OPEC+’s decision to delay a planned increase in production.
Brent crude jumped by US$1.98 or 2.7% to US$75.08 per barrel, while US Nymex crude gained US$1.98 or 2.8% to US$71.47 per barrel.
This extension of OPEC+ cuts—originally scheduled to rise by 180,000 barrels per day in December—has helped offset weak global demand.
Other sectors were also active, with Constellation Energy dropping 12.5% after its earnings report missed expectations, contributing to a 1.2% decline in the S&P 500 utilities sector.
Meanwhile, Talen Energy fell 2.2% after its plans to power a data centre were rejected by regulators.
In the currency markets, the US dollar weakened amid election-related uncertainties.
The Euro slid from US$1.0914 to US$1.0874, while the Australian dollar edged down from 66.11 US cents to 65.85 US cents.
The Japanese yen strengthened to JPY151.54 before closing near JPY152.15 per greenback.
Commodities markets were mixed, with base metals climbing as copper rose 1.4% and aluminium added 0.6%.
Gold futures eased slightly, down US$3.00 or 0.1% to US$2,746.20 an ounce as traders braced for the election and the Fed’s decision.
Iron ore prices rose by US$1.42 or 1.4% to US$103.91 a tonne, buoyed by expectations of stimulus from China as the National People’s Congress meets.
What’s ahead?
Looking forward, Australian investors await not only the RBA's interest rate call but also the bank’s monetary policy statement for insights into its strategy amid sticky inflation.
Other global highlights this week include China’s Caixin services index and US data on the ISM services index and trade balance, which will offer further clues on the state of the global economy.