US Stocks Bid into the Weekend – S&P up 0.4%
US stock markets rounded off the week on a positive note, with both the S&P and Dow closing at record highs. The Nasdaq led the charge, closing up 0.63% on the day, followed by the S&P, which gained 0.40%. The Dow also managed a marginal increase, rising by 0.09%. US Treasury yields eased slightly after recent rallies, with the 2-year yield dropping by 3.2 basis points to 3.955%, and the benchmark 10-year yield falling by 2.1 basis points to 4.075%. The dollar also pulled back, with the DXY slipping 0.3%, ending the week at 103.49. Meanwhile, oil prices took a hit amid persistent demand concerns, despite geopolitical risks. Brent crude dropped 1.87% to $73.06, while WTI fell 2.05%, settling at $69.22 per barrel. Gold had another standout day, reaching a record high of $2,722.54 before closing up 1.05% at $2,720.25.
US Election Moves Into Market Focus
For the past few months, the US election has taken a back seat for many investors, as attention has been on pressing geopolitical concerns and shifts in economic fundamentals. However, the race between Donald Trump and Kamala Harris is now coming to the forefront, and market volatility is expected to increase in the coming weeks as polling updates shift sentiment. As we head into the new trading week, the race remains close, with Trump holding a slight lead. Traders will be watching for opportunities in the so-called ‘Trump Trades’. Key assets such as small caps, Bitcoin, treasury yields, and the dollar typically rise if Trump looks likely to win, with the reverse effect if Harris gains momentum in the polls. As a result, traders expect heightened activity in these markets in the lead-up to 5 November.
China in Focus Early in the Week
This week is heavy on central bank activity, with early focus on China as the Asian trading day begins. The key Loan Prime Rate is expected to drop by 20 basis points, in line with expectations set by the People’s Bank of China (PBOC) in September. Any deviation from this could trigger sharp market movements. Beyond China, there are few macroeconomic data releases in the other two trading sessions today, with attention likely shifting to geopolitical risks. As the US election moves further into the spotlight, investors are gearing up for heightened volatility. This week will also see key central bank speakers, with the IMF and World Bank Meetings in progress. Later today, we will hear from Federal Reserve members Logan, Kashkari, and Schmid.
