European stock markets are expected to proceed with caution as the U.S. presidential election looms, with initial gains anticipated for some indices. Polls indicate a close race between Kamala Harris and Donald Trump, creating uncertainty among investors. Wall Street ended its last session before the election with losses, while Asian markets showed positive trends. The dollar weakened ahead of the election, and oil prices remained stable as traders monitored currency and bond market developments.
European Markets Brace for U.S. Presidential Election
PARIS (Reuters) – Major stock exchanges across Europe are anticipated to adopt a cautious stance this Tuesday, coinciding with the highly anticipated American presidential election, which polls indicate is shaping up to be extremely competitive.
Early indications suggest that the CAC 40 in Paris may open with a slight increase of 0.11%. Meanwhile, Frankfurt’s DAX could see a marginal rise of 0.04%, while London’s FTSE 100 is likely to experience a dip of 0.15%. The EuroStoxx 50 index is expected to hold steady, and the Stoxx 600 may edge up by 0.02%.
As Americans head to the polls, they will primarily choose between Democratic candidate Kamala Harris and her Republican opponent, Donald Trump. With millions having already voted by mail, opinion polls reflect a historically close race, leaving both campaign teams uncertain about the outcome in the key states that will likely determine the election’s result.
This air of uncertainty is prompting market participants to tread carefully. Analysts suggest that Trump’s stances on immigration, tax cuts, and tariffs could exert upward pressure on inflation, bond yields, and the dollar, while Harris’s policies are viewed as a continuation of the Biden administration’s approach.
Alongside the political dynamics in the U.S., investors are also paying close attention to service activity indicators for October from both the United States and the United Kingdom, alongside a flurry of corporate earnings reports from Europe.
Wall Street’s Last Session Before the Election
The New York Stock Exchange concluded its trading session on Monday with losses, setting the stage for the critical American presidential election that could significantly impact both the economy and global trade.
The Dow Jones index fell by 0.61%, losing 257.59 points to settle at 41,794.60 points. The Standard & Poor’s 500 saw a decrease of 16.11 points, or 0.28%, ending at 5,712.69 points. The Nasdaq Composite also dipped, down 59.93 points or 0.33%, closing at 18,179.984 points.
In market news, Tesla shares saw a drop of 2.46% following reports of a 5.3% year-on-year decline in sales in China for October, as released by the China Passenger Car Association.
In Asia, the Tokyo Stock Exchange recorded a positive close, with the Nikkei index rising by 1.11% to 38,474.9 points, rebounding after a sharp drop on Friday. The broader Topix index increased by 0.76% to 2,664.26 points.
In China, the Shanghai SSE Composite gained 2.32%, and the CSI 300 rose by 2.53%, buoyed by encouraging signs of economic improvement. The Caixin survey indicated that activity in China’s services sector accelerated in October at its fastest rate in three months.
Currency and Oil Market Updates
On the currency front, the dollar is showing signs of weakness on Tuesday, as traders adjust their positions in anticipation of the U.S. presidential election, with Trump’s victory now appearing less certain.
The dollar index has decreased by 0.13% against a basket of major currencies, falling to 103.67 points on Monday, marking its first decline since October 21.
The euro has appreciated by 0.11%, trading at 1.0889 dollars, while the British pound has gained 0.15%, now valued at 1.2977 dollars.
In the bond market, the yield on ten-year U.S. Treasury bonds has decreased by 1.4 basis points to 4.2949%, following a notable decline of 6.6 points the previous day, marking its largest drop in two months. Conversely, the yield on the German Bund of the same maturity saw a slight increase of one basis point to 2.401%.
As for oil prices, the market is relatively stable ahead of the election, with Brent crude rising by 0.05% to 75.12 dollars a barrel, and West Texas Intermediate (WTI) increasing by 0.07% to 71.52 dollars.