FX.co ★ Election Uncertainty May Lead To Choppy Trading On Wall Street

U.S. index futures indicate a neutral opening for the stock market today, as investors appear hesitant to make major moves before the U.S. elections on Tuesday. The political landscape is heating up, with Vice President Kamala Harris challenging former President Donald Trump. The tight polling numbers suggest that the presidential race results may not be clear by Election Day.

In addition to the presidential race, the outcomes of the House and Senate elections are drawing attention, as these will influence the legislative power of the future president. Market participants are also anticipating the Federal Reserve's monetary policy announcement scheduled for Thursday. There is speculation that the Fed will cut interest rates by another 25 basis points. However, all eyes will be on their policy statement for hints about further rate adjustments.

Following Thursday's market downturn, stocks rallied as trading commenced on Friday. Although the major indices retreated slightly as the day progressed, they maintained a positive trajectory. The Nasdaq led the gains, climbing 144.77 points (0.8%) to close at 18,239.92, recovering some of the ground lost in earlier sessions. The Dow rose 288.73 points (0.7%) to 42,052.19, rebounding from a monthly low, while the S&P 500 increased by 23.35 points (0.4%) to 5,728.80.

Despite Friday’s rally, all major indices recorded weekly declines. The Dow dropped by 0.2%, with the S&P 500 and the Nasdaq both sliding by 1.4% and 1.5%, respectively. Positive earnings reports from major companies such as Intel and Amazon contributed significantly to Friday's turnaround.

Intel's shares surged by 7.8% following their release of strong third-quarter results and promising forecasts. Similarly, Amazon's stock jumped 6.2% post-announcement of their robust quarterly earnings, surpassing Wall Street's expectations. Conversely, Apple shares fell even after announcing better than expected fourth-quarter results.

Investors also processed the Labor Department's report, which highlighted a notably lower job growth for October compared to expectations. The report noted a marginal increase of 12,000 jobs for the month following a revised September figure of 223,000. Economists had predicted an increase of 113,000 jobs. The unemployment rate remained stable at 4.1%, consistent with projections.

Although the data spurred some concern about economic health, it also generated optimism regarding interest rate trends. The impact of Hurricanes Helene and Milton, along with the Boeing strike, are factors expected to minimize influence on the Federal Reserve's gradual rate reduction strategy.

Retail stocks benefited from Amazon’s positive results, leading to a 2.6% rise in the Dow Jones U.S. Retail Index, marking a record closing high. Strength was also observed in biotechnology stocks, evidenced by a 2.2% increase in the NYSE Arca Biotechnology Index. Gains were also seen in airline, networking, and computer hardware sectors, while utilities and natural gas stocks experienced weakness.

**Commodity and Currency Markets**

Crude oil futures are climbing $1.87, reaching $71.36 a barrel, following a $0.23 increase to $69.49 on Friday. Meanwhile, gold futures have inched up $0.40 to $2,749.60 an ounce, recovering from a $0.10 dip in the previous session.

In currency markets, the U.S. dollar is trading at 152.01 yen, down from 153.01 yen at the conclusion of Friday's New York session. Against the euro, the dollar is currently valued at $1.0896, compared to $1.0834 last Friday.

**Asia**

Despite regional tensions and the anticipation of U.S. political events and monetary policy decisions, Asian markets advanced in a subdued trading environment on Monday. Japanese markets were closed in observance of Culture Day. The dollar decreased, reflecting the subdued U.S. employment data indicating a potentially cooling labor market. Gold saw gains amid joint naval exercises between Iran and Azerbaijan in the Caspian Sea. Iran's Supreme Leader, Ayatollah Ali Khamenei, has issued a stern warning that both Israel and the United States should expect severe repercussions for their recent actions against Iran. According to a report by The Wall Street Journal, Iran is allegedly preparing a sophisticated assault on Israel, involving the potential use of missiles armed with powerful warheads.

On the economic front, both West Texas Intermediate (WTI) and Brent crude futures saw an approximate 2 percent increase during Asian market trading. This uptick follows OPEC+'s decision to defer its planned production boost from December by one month.

China's Shanghai Composite Index rose by 1.2 percent, reaching 3,310.21. This surge comes as investors anticipate the upcoming National People's Congress in China, which is expected to introduce a fiscal stimulus strategy aimed at economic stabilization. The strategy may involve local government debt swaps and bank capital injections.

In Hong Kong, the Hang Seng Index increased by 0.3 percent to 20,567.52, driven by speculation regarding new policy initiatives from Beijing to stimulate consumer spending.

Seoul's stock market posted significant gains after the opposition Democratic Party leader supported the government's plan to abolish a scheme taxing stock investment profits. The Kospi Index increased by 1.8 percent, closing at 2,588.97, with Samsung Electronics advancing by 0.7 percent, SK Hynix surging by 6.5 percent, and battery maker LG Energy Solution rising by 3.3 percent.

Australian markets also made advances, with banks and healthcare stocks leading the charge ahead of an upcoming policy meeting by the Reserve Bank of Australia. The S&P/ASX 200 Index climbed 0.6 percent to 8,164.60, while the broader All Ordinaries Index rose by 0.5 percent to 8,422.80. Westpac's stock increased by 0.9 percent as the bank expanded its share buyback program by an additional A$1 billion. However, Mineral Resources' shares plummeted by 9.6 percent following news that Managing Director Chris Ellison will resign after being found to have used company resources for personal gain.

Across the Tasman Sea, New Zealand's S&P/NZX-50 Index edged up by 0.3 percent to 12,590.60.

**In Europe:**

European stocks struggled for clear direction on Monday amid investor uncertainty preceding this week’s U.S. presidential election and the Federal Reserve's interest rate announcement. With the election just a day away, over 75 million early votes have been cast, as estimated by the University of Florida. The election's outcome will determine whether the new president will face a cooperative or hostile Congress, which could either uphold or alter the current legislative balance if it results in a divided control of the House and Senate.

The U.S. Federal Reserve is set to announce its interest rate decision on Thursday, with expectations for a 25 basis point cut, following a larger 50 basis point reduction in September. Simultaneously, the Bank of England is anticipated to reduce rates by 25 basis points during its meeting on Thursday.

In Europe, while the UK's FTSE 100 Index increased by 0.5 percent, both the French CAC 40 Index and the German DAX Index experienced slight declines of 0.1 percent. Construction firm Skanska AB saw a rise in its stock following the signing of a contract to construct office blocks in London's West End. Energy giants BP Plc and Shell also gained as oil prices climbed over $1, spurred by OPEC+'s decision to delay output increases. Burberry's stock surged amid speculation that Italy’s Moncler might consider an acquisition bid. Conversely, STMicroelectronics faced a downgrade from Morgan Stanley, which led to a decline in its shares, and Schneider Electric fell after the sudden removal of CEO Peter Herweck due to strategic execution concerns.

**U.S. Economic News:**

The Commerce Department will release its report on September's new orders for manufactured goods at 10 a.m. ET, with expectations of a 0.5 percent decline following a 0.2 percent decrease in August. Additionally, at 1 p.m. ET, the Treasury Department will disclose results from the auction of $58 billion worth of three-year notes.

**Stocks in Focus:**

Nvidia shares are seeing a pre-market boost on news that it will replace Intel in the Dow Jones Industrial Average before Friday’s trading session. Sherwin-Williams is also experiencing a 4.8 percent pre-market increase as it is set to replace Dow Inc. in the index. S&P Dow Jones Indices explained that these adjustments aim to better represent the semiconductor and materials sectors, respectively. On the flip side, shares of Intel and Dow are likely facing declines upon their removal from the prestigious index.