Global stocks slip on US poll worry; crude oil prices weak – Dollar tumbles against safe haven Swiss franc
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NEW YORK, Nov 4, (Agencies): Global equity markets slipped amid investor concerns about the outcome of the US presidential election on Nov 8, while oil prices remained weak on concerns about surging inventories and whether OPEC members will adhere to planned production limits.
Weaker oil prices raised concerns about low inflation, sending US Treasury prices higher, while election-related worries sent the dollar down against the safe-haven Swiss franc.
A dismal outing for key Asian and European share indexes weighed down the MSCI’s 47-country “All World” index , which was down 0.28 percent. The index hit a 4-month low, but found some support from Wall Street.
US stocks treaded water in choppy trade as uncertainty about the outcome of the election on Tuesday continued to weigh on investor sentiment and data showing a strong pace of hiring in October had little impact on the market.
US employers maintained a strong pace of hiring in October and boosted wages for workers, which could effectively seal the case for a December interest rate increase from the US Federal Reserve.
The Dow Jones industrial average rose 11.92 points, or 0.07 percent, to 17,942.59, the S&P 500 gained 4.41 points, or 0.21 percent, to 2,093.07 and the Nasdaq Composite added 11.71 points, or 0.23 percent, to 5,070.11.
Investors have been unnerved by signs the US presidential race between Democrat Hillary Clinton and Republican Donald Trump is tightening; Clinton had until recently been thought to have a clear lead.
The latest Reuters/Ipsos polling showed Clinton, seen as the status quo candidate by markets, maintaining a narrow lead over Trump.
European shares fell, weighed down by weaker drugmakers after two US lawmakers called on federal antitrust regulators to open a probe for possible price fixing.
Europe’s broad FTSEurofirst 300 index was down 0.78 percent at 1,296.44.
Oil futures were on course for their sixth straight day of falls amid tensions between Saudi Arabia and Iran that could scupper a key supply-cut pact while a surge in US crude inventories and muted demand continued to weigh.
Brent crude was down 0.56 percent at $46.09 a barrel, while US crude was down 0.36 percent at $44.50.
US Treasury prices gained as the lower oil prices raised concerns about low inflation, and as uncertainty about the election enhanced the appeal of lower risk assets.
Benchmark 10-year notes were up 7/32 in price to yield 1.79 percent, after rising as high as 1.83 percent on the employment data.
US
The S&P 500 index was on track to snap its eight-day losing streak, its longest since 2008, even as worries over the outcome of the US presidential election continued to weigh on investor sentiment.
Still, the three major indexes looked set to post steep weekly losses.
Investors have been unnerved by signs the US presidential race between Democrat Hillary Clinton and Republican Donald Trump is tightening, after Clinton had until recently been thought to have a clear lead.
The latest Reuters/Ipsos polling showed Clinton, seen as the status quo candidate by markets, maintaining a narrow lead over Trump.
However, several swing states that the Republican challenger must win have shifted from favoring Clinton to toss-ups, offering Trump a possible route to victory. Nonfarm payrolls increased by 161,000 jobs last month amid gains in construction, healthcare and professional and business services, the Labor Department said.
Unemployment rate fell to 4.9 percent from 5.0 percent and average hourly earnings increased 0.4 percent in October after advancing 0.3 percent in September.
“The market will continue to focus on the polls and probable election results.”
Though the US central bank is expected to increase borrowing costs next month, that decision will likely depend on the outcome of Tuesday’s election.
Traders are pricing in a 71.5 percent chance for a December rate hike, according to CME Group’s FedWatch tool. The CBOE Volatility Index, a gauge of near-term investor anxiety, fell 2 percent but stayed near a more than four-month high.
UK
Britain’s pound leapt to $1.25 on Friday, one day after judges ruled London needed parliamentary approval to trigger Brexit, as the dollar and world stocks were rocked by US vote fears.
Sterling hit a level last seen on October 7 as Prime Minister Theresa May told European leaders that her March deadline for triggering Brexit negotiations “remains unchanged” – despite growing worries that the ruling could delay Britain’s EU exit.
Trading floors around the world have been plunged into turmoil this week as Democrat Hillary Clinton’s lead over Republican Donald Trump has been slashed days before the November 8 election.
Meanwhile Thursday, Bank of England governor Mark Carney warned that the ruling for a parliamentary vote on Article 50 was part of the “uncertainty” arising from Brexit, after the institution held British interest rates at 0.25 percent.
European stocks swung sharply lower on persistent fears that maverick US tycoon Trump could win next week’s election and beat market favourite Clinton.
Frankfurt shed 0.7 percent, London was down 1.5 percent and Paris shed 0.9 percent in value.
– Key figures aound 1330 GMT
Pound/dollar: UP at $1.24.94 from $1.2463 Thursday
Euro/pound: DOWN at 88.79 pence from 89.12 pence
Euro/dollar: DOWN at $1.1093 from $1.1107
Dollar/yen: UP at 102.97 yen from 102.93 yen
London – FTSE 100: DOWN 1.5 percent at 6,692.31
Frankfurt – DAX 30: DOWN 0.7 percent at 10,258.83
Paris – CAC 40: DOWN 0.9 percent at 4,371.42
EURO STOXX 50: DOWN 0.7 percent at 2,953.40
Asia
A sharp fall in Tokyo led losses in Asian stock markets Friday as traders fret over next week’s US election, with the dollar weakening further and safe-haven gold maintaining its lustre.
Those losses spread to Asia again, with Tokyo — which was closed for a holiday Thursday — ending 1.3 percent lower. Adding to selling on the Nikkei was a surge in the yen against the dollar as traders rush to safe investments while speculation swirls the Federal Reserve will hold off an expected interest rate hike in December if Trump wins owing to fears about the economy.
The greenback bought 103.20 yen in Asia, up from 102.93 yen in New York but well down from the 105.30 yen mark touched earlier this week.
“The dollar is showing clear signs that investors are worried about a Trump win,” Sean Callow, a senior strategist at Westpac Banking Corp. in Sydney, told Bloomberg News.
Shanghai fell 0.1 percent and Sydney was down 0.9 percent, Seoul lost 0.1 percent and Singapore slipped 0.5 percent. There were also losses in Wellington and Jakarta. Hong Kong dipped 0.2 percent in the afternoon.
Tokyo — Nikkei 225: DOWN 1.3 percent at 16,905.36 (close)
Hong Kong — Hang Seng: DOWN 0.2 percent at 22,642.62 (close)
Shanghai — Composite: DOWN 0.1 percent at 3,125.32 (close)
Oil
Oil futures were on course for their sixth straight day of falls on Friday as signs of tensions resurfaced between Saudi Arabia and Iran that could scupper a key supply cut pact while a surge in US crude inventories and muted demand continued to weigh.
Brent crude futures were at $45.23 per barrel at 1413 GMT, down $1.12 from their last close. US West Texas Intermediate (WTI) futures were down 95 cents at $43.71 a barrel.
At a meeting of OPEC experts last week, Riyadh threatened to raise oil output steeply to bring prices down if Tehran refused to limit its production, a source from the Organization of the Petroleum Exporting Countries (OPEC) said.
The meeting was intended to work out the details of cuts ahead of the next OPEC meeting on Nov 30 following a decision to reduce output in Algiers to 32.50-33.0 million barrels per day in order to boost prices. The dips put crude on the longest losing run since June and, before that, since January, with Brent shedding almost 14 percent since its recent peak in mid-October.
“There has been a very strong retreat and technically, prices are starting to reach oversold levels,” Olivier Jakob of consultancy Petromatrix said.
Analysts said markets were also weighed down by traders pulling out money from futures ahead of the US presidential election, which is seen as a risk to markets.
Gold
Gold steadied on Friday, heading for its biggest weekly rise since mid-September as jitters over next week’s US election offset a solid payrolls report that shored up expectations for a US interest rate hike next month.
Global equity markets slipped amid investor concerns about the outcome of the US presidential election on Nov 8, while the dollar quickly shed gains made in the wake of the well-received US jobs data.
An initial dip in gold was quickly bought into as investors remained on edge ahead of Tuesday’s vote.
Spot gold was at $1,303.53 an ounce at 1512 GMT, off a low of $1,295.71 in the immediate wake of the payrolls data but little changed from $1,303.25 on Thursday. US gold futures for December delivery were up 0.1 percent at $1,304.60.
The dollar index was on track for its biggest weekly drop since mid-August after the Federal Bureau of Investigation said last week it was reopening a probe into Democrat candidate Hillary Clinton’s use of a private email server while Secretary of State. The FBI announcement on Friday narrowed Clinton’s lead over her Republican rival Donald Trump, polls showed, rattling financial markets which had been pricing in a Clinton victory.
That helped send gold to a one-month high on Thursday, and has put it on track to rise 2 percent this week.
“Gold implied volatility rallied sharply across the curve over the past week, as investors rotated to safe haven assets after polls tightened,” Citi said in a note. “As the election keeps driving gold prices in the short-term, we expect gold vol to remain elevated into Election Day.”
Gold prices in India swung to a discount this week as a rally in prices dampened retail demand and prompted jewellers to reduce purchases, while buying in leading consumer China rose due to safe-haven buying.
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