Investors focus on the US presidential election. The RBA kept the interest rate at 4.35%

At the end of Monday, the Dow Jones Index (US30) fell by 0.61%, the S&P 500 Index (US500) was down 0.28%, and the NASDAQ Technology Index (US100) closed negative 0.35%. There was pressure to liquidate long positions ahead of the US presidential election.

The US presidential election will be held today. The latest polls suggest a tighter contest between Kamala Harris and Donald Trump than initially expected. Market attention is also focused on which party controls Congress, as a win could lead to significant changes in spending and tax policy. Trump’s victory will likely support the US dollar, which will put pressure on other currencies, especially the Mexican Pesso (MXN), as Trump plans to impose tariffs of up to 300% on Mexican-made cars. Also, Trump’s victory could trigger a rise in digital assets, as he constantly voiced support for the digital assets industry during his campaign. Gold could experience pressure amid a strengthening dollar. If Harris wins, digital assets could come under pressure as the politician favors strict regulation of this market. If Harris’s election leads to instability in the stock market or a weaker dollar, gold could continue to rise.

Intel (INTC) stock price fell more than 2% and topped the list of Dow Jones Industrials losers after S&P Dow Jones Indices said Nvidia will replace the stock in the Dow Jones Industrial average before the start of trading on November 8. Fox Corp (FOXA) closed higher by more than 2% after reporting first-quarter revenue of $3.56 billion, beating the consensus prognosis of $3.37 billion.

Equity markets in Europe were declining yesterday. Germany’s DAX (DE40) fell by 0.56%, France’s CAC 40 (FR40) closed down 0.50%, Spain’s IBEX 35 (ES35) lost 0.32%, and the UK’s FTSE 100 (UK100) closed plus 0.09%. The Eurozone manufacturing PMI for October was revised upward by 0.1 to 46.0 from the previously reported 45.9. Swaps discount the odds of a 25 bps ECB rate cut at the December 12 meeting by 100% and a 50 bps rate cut at the same meeting by 17%.

Switzerland’s unemployment rate in October 2024 was 2.5% seasonally unchanged from the previous month. The number of unemployed increased by 3,202 from the previous month to a 32-month high of 116,447. On a seasonally adjusted basis, the unemployment rate remained at 2.6% in October. Good data for the Swiss franc.

On Monday, oil prices rose nearly 3% after OPEC+ decided to postpone its planned 180,000 bpd production increase for a month due to falling prices and weak demand. Price gains were boosted by renewed geopolitical risks, with reports that Iran is planning new attacks on Israel.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) fell by 2.63%, China’s FTSE China A50 (CHA50) rose by 1.10%, Hong Kong’s Hang Seng (HK50) gained 0.30%, and Australia’s ASX 200 (AU200) was negative 0.19%. Chinese indices have been rising since the stock exchange opened today. The rally was driven by positive PMI data showing that business activity in China hit a four-month high in October, helped by a rebound in factory output and accelerating growth in the services sector. Investors are also keeping a close eye on the ongoing National People’s Congress, where new details on fiscal stimulus measures are expected. According to media reports, China may be considering a stimulus package of over 10 trillion yuan to spur the economy. However, market sentiment remained cautious ahead of a tense US presidential election as a possible second term for former President Donald Trump could lead to higher tariffs and increased tensions between the US and China.

The Reserve Bank of Australia (RBA) left the money rate unchanged at 4.35% at its November meeting, keeping borrowing costs unchanged for the eighth consecutive time and in line with market estimates. The Central Bank noted that while core inflation has declined significantly and is expected to decline for some time, core inflation remains too high. The board added that monetary policy should remain fairly restrictive until it is confident that inflation is moving steadily toward the target range.

Indonesia’s economy grew by 4.95% y/y in Q3 2024, compared to market estimates of 5.0%, and after growing 5.05% in Q2. This is the slowest GDP growth since Q3 2023, highlighting the challenging path of new President Prabowo Subianto, who aims to drive economic growth to 8% during his five-year term to 2029.