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Investors avoid risk before US voting begins

Global markets showed a mixed performance early in the week as investors waited on voting for the US presidential election to begin later in the day. US equities struggled to find a clear direction but closed slightly lower on Monday, while Asian markets were mixed in response to increased Chinese services activity and the Reserve Bank of Australia’s (RBA) decision to keep rates unchanged. European stocks edged down a day earlier, while gold and currencies barely moved early on the election day.

Date
Auteur
Shane Strowmatt, LGT
Temps de lecture
5 minutes

Investor in light and shade
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Stocks in the Asia-Pacific region showed mixed performances on Tuesday. Hong Kong’s Hang Seng Index gained 1.3% and mainland China’s CSI 300 surged 2%, supported by increased services activity. China's services sector expanded at its fastest pace in three months in October, with the Caixin/S&P Global services Purchasing Managers’ Index (PMI) increasing to 52.0 from 50.3 in September. This growth aligns with the official PMI, suggesting that Beijing's recent stimulus measures are beginning to positively impact business conditions.

Australian central bank maintains high interest rates

Elsewhere in the Asia-Pacific region, Japan’s Nikkei 225 was trading 1.4% higher, after reopening from a public holiday on Monday, while Korea’s Kospi fell 0.5%. Australia’s S&P/ASX 200 was 0.4% lower after the country’s central bank kept its policy rate at a 12-year high of 4.35% on Tuesday, citing persistently high underlying inflation. The RBA indicated that restrictive monetary policy would continue until core inflation shows a sustained decline. Despite headline inflation dropping to 2.8% in the third quarter, underlying inflation remains at 3.5%. The labour market's unexpected strength and steady employment gains have reduced the likelihood of a rate cut this year, with markets not expecting easing until mid-2025.

US traders avoid risk, factory orders decline

US equities declined on Monday as investors avoided taking new risks ahead of the election results. The Dow Jones Industrial Average closed at 41,794.60 points, losing 0.6%, while the S&P 500 dropped 0.3% to finish at 5712.69 points. The Nasdaq-100 fell 0.4% to 19,963.60 points.

In macroeconomic data, US factory orders fell by 0.5% in September, marking the second consecutive monthly decline, following a 0.8% drop in August, according to the Census Bureau on Monday. Orders for non-defense capital goods excluding aircraft, a key indicator of business investment, rose 0.7% in September, while shipments of these goods decreased by 0.1%. The data suggests a slowdown in business spending on equipment in the third quarter. Factory orders remained unchanged compared to the same period last year.

Euro-area manufacturing PMI points to stabilisation

Euro-area manufacturing activity showed signs of stabilisation in October, despite contracting for the 28th consecutive month. The euro-area manufacturing PMI, compiled by S&P Global, rose slightly to 46.0 from a preliminary estimate of 45.9, though still below the growth threshold of 50. In Germany, the bloc’s largest economy, the manufacturing PMI increased to 43.0 in October from 40.6 in September, marking a three-month high, as declines in output and new orders eased.

Meanwhile, the Sentix investor confidence index for the euro area rose slightly to -12.8 points at the beginning of November, driven by an improvement in the current situation to -21.5 points. Germany, while still a major concern within the euro area, saw its composite index increase by 1.7 points, indicating a modest improvement.

European stock indices were slightly down on Monday. The STOXX Europe 600 fell 0.3%, while Germany’s DAX and France’s CAC 40 both posted losses of 0.6% and 0.5%, respectively. The Swiss Market Index decreased by 0.5%.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Bayer, DHL Group, Ferrari, Fresenius Medical Care, and Zalando.

Economic data in focus: US presidential election, ECB President Christine Lagarde speaks (14:30), US ISM Non-Manufacturing Index (15:00).

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