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Markets strong with US elections in focus

Equity markets in the US and Europe rallied to finish last week, while Asian stocks were trading higher on Monday. This week, markets will be focused on Tuesday’s US presidential election and a series of central bank decisions. Despite tight polls, assets associated with former President Donald Trump made significant gains over the course of October, and any signs that Kamala Harris may win the election could lead to volatility. Two days after the election, the Federal Reserve (Fed) is due to announce its latest monetary policy decision.

Date
Auteur
Shane Strowmatt, LGT
Temps de lecture
5 minutes

Market chart
© Shutterstock

The week’s major central bank decisions include the Fed on Thursday, the Bank of England on the same day and the Reserve Bank of Australia on Tuesday. Economic data releases include various Purchasing Managers’ Indices in the first half of the week and University of Michigan consumer sentiment on Friday. Additionally, almost a third of the S&P 500 has yet to release quarterly results and figures from many European companies are also due.

Asian markets start the week on a strong note

Investors also expect to receive details about China’s most recent stimulus plans on Friday, one day after the world’s second-largest economy releases trade data. Hong Kong’s Hang Seng Index edged up 0.3% and mainland China’s CSI 300 was 0.9% higher to start the week. Korea’s Kospi was leading gains in the region, rising 1.5%, while Australia’s S&P/ASX 200 gained 0.6%. Japanese markets were closed for a public holiday.

OPEC+ delays output hike, oil prices rise

Oil prices rose over USD 1 per barrel on Monday after OPEC+ decided to delay its planned output increase by one month. Brent crude increased to over USD 74, while West Texas Intermediate (WTI) rose to nearly USD 71. In other assets, gold was trading stable around USD 2740 per ounce, while bitcoin fell slightly over the weekend to trading around USD 69,000 on Monday. The US Dollar Index slipped abruptly after a poll showed Harris ahead in the state of Iowa in the early hours of Monday.

US equities recover slightly

US equities ended the week on a positive note after suffering large losses on Thursday. The Dow Jones Industrial Average climbed 0.7% to close at 42,052.19 points, while the S&P 500 rose 0.4% to finish at 5728.80 points. The Nasdaq-100 also gained 0.7%, ending at 20,033.14 points. Also on Friday, the CBOE Volatility Index - a gauge of market fear - cooled back down after spiking for two days following disappointing outlook from some tech companies last week.

Weak US macroeconomic data

US nonfarm payrolls, released Friday, increased by just 12,000 in October, the weakest growth since December 2020, largely due to hurricanes and the Boeing strike. The unemployment rate remained steady, however, at 4.1%. The data was interpreted as largely supporting another interest rate cut by the Federal Reserve on Thursday. Meanwhile, the US ISM Manufacturing PMI showed signs of economic weakness in the world’s largest economy. The index decreased to 46.5% in October, down from 47.2% in September, marking the seventh consecutive month of contraction, according to the Institute for Supply Management on Friday.

Swiss inflation well below SNB target

The Swiss Consumer Price Index (CPI) decreased by 0.1% in October 2024, according to the Federal Statistical Office on Friday. Annual inflation stood at 0.6%, well below the Swiss National Bank’s (SNB) target of less than 2%. Core inflation, excluding volatile items, rose by 0.1% month-on-month and 0.8% year-on-year. The Swiss franc dropped versus major currencies after the inflation data was released as market participants anticipated further rate cuts by the SNB. Retail trade turnover in Switzerland increased by 1% in September 2024 compared to the same month last year. Adjusted for sales days and holidays, real turnover, which accounts for inflation, grew by 2.2% year-on-year. The Swiss Market Index led European gains Friday, advancing 1.5%, while the Euro Stoxx 600 gained 1.1%.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Berkshire Hathaway and Vertex Pharmaceuticals.

Economic data in focus: Spanish Manufacturing Purchasing Managers’ Index (08:15), Italian Manufacturing Purchasing Managers’ Index (08:45), French Manufacturing Purchasing Managers’ Index (08:50), German Manufacturing Purchasing Managers’ Index (08:55), euro-area Manufacturing Purchasing Managers’ Index (09:00), Sentix investor confidence for the eurozone (09:30), US factory orders (15:00).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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