International stock markets rose on Monday, but the dollar declined as investors braced for a “coin-toss” US presidential election.
A major rate decision by the Federal Reserve and expected Chinese economic boosting measures following an announcement by eight OPEC+ countries on Sunday to prolong production restrictions through the end of the next month, oil prices also surged by almost 2.5 per cent.
Growing worries about declining demand in two important markets, China and the US were the driving forces behind this decision.
Major European and Asian markets all posted gains, taking cues from a positive close on Wall Street last week. Analysts noted that this week could be pivotal, with investors keenly watching for any shift in momentum between Democratic Vice President Kamala Harris and Republican candidate Donald Trump as they continue to be tightly matched in the polls.
The dollar weakened against other major currencies on Monday, reflecting a recent Iowa poll showing Harris in the lead in a state previously carried by Trump in 2016 and 2020. Analysts suggest that a Trump victory could benefit the dollar and boost Treasury yields, particularly given his pledges to implement tax cuts and enforce significant import tariffs.
Market attention is also focused on the elections for the US Senate and House of Representatives, where a potential Republican majority in both chambers could open the way for substantial fiscal policy changes.
According to experts, such a shift could negatively affect bondholders and lead to increased yields in the near term.
This election coincides with a highly anticipated Federal Reserve meeting, where investors expect a rate cut of 25 basis points, following the 50-basis-point cut at the last session. The outcome of the US election is expected to have significant repercussions for China, where the government is set to finalize an economic stimulus package this week. Analysts suggest the results could influence the scale of the measures, with both US candidates pledging tougher policies on China; Trump, in particular, has proposed imposing a 60 percent tariff on all Chinese imports.
Economists forecast that Chinese lawmakers will approve a stimulus package totaling about one trillion yuan ($140 billion) to assist debt-laden local governments, along with a one-time trillion-yuan infusion for banks. Stock markets in Hong Kong saw gains, and Shanghai closed more than one percent higher, while Tokyo remained closed for a holiday. In the eurozone, Paris and Frankfurt also posted gains, with London up by 0.6 percent amid expectations of a rate cut by the Bank of England on Thursday after inflation fell below target.
Oil prices were further buoyed following a warning from Iran’s Supreme Leader Ayatollah Ali Khamenei, who over the weekend cautioned that the US and Israel would “receive a strong response” for recent strikes on October 26, which had been a retaliation for an October 1 missile barrage.#
Key figures around 1100 GMT:
London – FTSE 100: UP 0.6 percent at 8,229.52 points
Paris – CAC 40: UP 0.4 percent at 7,434.89
Frankfurt – DAX: UP 0.1 percent at 19,271.49
Hong Kong – Hang Seng Index: UP 0.3 percent at 20,567.52 (close)
Shanghai – Composite: UP 1.2 percent at 3,310.21 (close)
Tokyo – Nikkei 225: Closed for a holiday
New York – Dow: UP 0.7 percent at 42,052.19 (close)
Euro/dollar: UP at $1.0902 from $1.0833 on Friday
Pound/dollar: UP at $1.2964 from $1.2917
Dollar/yen: DOWN at 151.82 yen from 153.01 yen
Euro/pound: UP at 84.15 from 83.86 pence
Brent North Sea Crude: UP 2.3 percent at $74.80 per barrel
West Texas Intermediate: UP 2.5 percent at $71.20 per barrel
(AFP)
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