US Stocks Choppy Ahead of Election – Dow Drops 0.5%
US stock indices largely held steady in trading yesterday as investors continued to monitor updates on the US presidential election. The Dow dipped, losing 0.52% on the day, while the S&P and Nasdaq closed near flat, with the S&P dropping 0.07% and the Nasdaq gaining 0.05%. Some ‘Trump trades’ took a hit as news spread that Kamala Harris had gained a lead in the Iowa polls, sending US Treasury yields sharply lower: the 2-year yield dropped 6.8 basis points to 4.135%, and the 10-year fell 9.0 basis points to 4.280%. The dollar also fell, with the DXY losing 0.24% to close at 103.69. Oil prices rallied sharply as OPEC+ confirmed it would delay production increases due to market uncertainty, with Brent climbing 2.8% to $75.15 and WTI rising 3.0% to $71.56. Gold prices edged higher, with spot gold climbing 0.1% to finish at $2,737.35 an ounce.
Crucial States Hold the Key to the White House
Despite the millions of people voting—and millions who have not—the US election appears to hinge on the crucial votes in key states, and in some cases, specific regions within those states. The key battleground states are Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania, and Wisconsin. Traders anticipating early positions in response to the election outcome will closely watch these seven states, as any swings could guide stronger trades either in alignment with or against the ‘Trump trade’ depending on the results. Polls are set to close in most of these states between 7 pm ET and 9 pm ET, with Nevada closing later at 10 pm due to its location further west. Particularly volatile trading conditions are expected as results come in. If the race remains tight, a mixed result in terms of control of the White House and Congress could lead to continued market volatility in the days and weeks ahead, while a decisive outcome could initiate new and strong trends.
US Election in Focus for Traders Today
It is Election Day in the US, and as in recent sessions, updates on the presidential race will have the greatest market impact. However, a few other key updates from outside the US may also attract traders’ attention. The Reserve Bank of Australia is set to announce its latest rate decision during the Asian session. Although a ‘no change’ call is widely expected, traders anticipate potential volatility around adjustments to forward guidance in the statement and press conference. In the London session, the MPC will complete its Monetary Policy Report hearings before the Parliament’s Treasury Committee, which could prompt movements in the pound. The real focus, however, will begin as polls open in the US and any shifts in polling are reported. The ISM Services PMI data is also due in the US, but its impact is expected to be minimal today.
