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What’s happening: As the counting of votes continues across the US for the next President, markets are bracing for a Donald Trump victory.
What happened: The US election outcome is among the most market moving events, as the world’s largest economy impacts the state of countries around the globe.
European stock markets rose, bitcoin jumped to a record high, and Asian indices remained volatile as the US election results from different states flowed in.
Why it matters: At the time of publishing, Republican candidate Donald Trump was leading with a 267 tally versus 224 for Democratic candidate Kamala Harris.
Bitcoin briefly reached a record high near the key $75,000 resistance level on Tuesday evening, as investors braced for a likely Trump victory in the US elections. Markets expect more relaxed regulations on cryptocurrencies under a Trump Presidency.
Donald Trump’s policies also include lowering tax rates, which gave a fillip to investor sentiment, resulting in an aggressive selloff in US government bonds.
At 9am GMT today, European indices were trading mostly higher. FTSE 100 was up 1.57% at 8,300.47, the German DAX had added 1.55% to reach 19,555.25, France’s CAC 40 had climbed 2.15% to 7,566.29 and the STOXX Europe 600 was up 1.87% at 519.08. The IBEX 35 bucked the trend and was trading lower by 0.62% at 11,765.80.
Bitcoin prices had eased from their record high but were still trading at $73,689. Ethereum was up more than 8% at $2,619.
In Asia, the Nikkei 225 had soared 2.61% to 39,480.67 and India’s Sensex had climbed 1.04% to 80,306.52, while both Hong Kong’s Hang Seng and China’s Shanghai indices were down 2.23% and 0.09%, respectively.
What to watch: Investors will continue monitoring the US Presidential election results as counting continues till one of the candidates gets a 270 majority. Markets will also watch the US stock market, which will open later today and respond to the election results.
Context: The CAD/USD forex pair fell this morning, as investors awaited the next US President to be announced and assessed the latest economic data from Canada.
Details: Election results continue to be tallied across the US, with investors not expecting a blowout margin of victory for either candidate. Democratic nominee Kamala Harris and Republican candidate Donald Trump are looking at the so-called swing states (Pennsylvania, North Carolina, Georgia, Arizona, Nevada, Wisconsin, and Michigan) to give them an edge in the Presidential race. Meanwhile, the US dollar is already pricing in a Trump victory.
Imports to Canada declined by 0.4% to C$65.2 billion in September, the lowest level in four months. Exports from Canada slipped by 0.1% to C$63.88 billion.
The S&P Global Canada services PMI rose to 50.4 in October, from 46.4 in September, returning to the expansion zone. Composite PMI also climbed to 50.7 in October, versus 47.0 in the previous month.
The Bank of Canada has cut its benchmark interest rate by 125 bps since June this year, including the recently announced rate cut of 50 bps.
Weakness in price of crude oil, one of Canada’s major exports, exerted further pressure on the loonie. WTI crude oil prices fell 0.4% to $71.70 per barrel this morning.
Strength in the US dollar also weighed on the CAD/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.7% to 104.18 this morning.
The CAD/USD forex pair slipped around 0.4% to 1.3883 this morning. The S&P/TSX Composite Index ended Tuesday’s session at 24,387.90, up 0.54%.
What to watch: Investors await the release of economic data on Ivey Purchasing Managers Index from Canada today. The Ivey Purchasing Managers Index in Canada, which surged to 53.1 in September, is expected to rise further to 54.2 in October.
Other Markets: US trading indices closed higher on Tuesday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 1.02%, 1.23% and 1.32%, respectively.
German Foreign Minister Baerbock announced plans to provide further aid worth €200 million to Ukraine. The news sent the safe-haven US dollar index higher in forex trading this morning.
Japan’s services PMI came in at 49.7 in October, slightly higher than a flash reading of 49.3. However, the country’s services activity slipping into the contraction zone, from a reading of 53.1 in the previous month, exerted pressure on the JPY/USD forex pair.
Australia’s Ai Group Industry Index fell sharply by 10.1 points to a reading of -28.8 in October. This being the 30th month of decline sent the AUD/USD pair lower in forex trading this morning.
New Zealand’s unemployment rate rose to 4.8% in the third quarter, from 4.6% in the previous quarter. The country’s jobless rate surging to the highest level since the December quarter of 2020 exerted pressure on the NZD/USD forex pair.
The American Petroleum Institute said that US crude oil inventories rose by 3.132 million barrels in the week ended November 1, compared to a decline of 0.573 million barrels in the previous week, which sent the WTI crude oil prices lower this morning.
Russia’s composite PMI and services PMI, Germany’s factory orders, new passenger car registrations, composite PMI and services PMI, Spain’s composite PMI and services PMI, Italy’s new passenger car registrations, composite PMI and services PMI, France’s composite PMI and services PMI, Eurozone’s producer price inflation, composite PMI and services PMI, UK’s composite PMI and services PMI, Mexico’s auto exports and car output, US MBA mortgage applications, crude oil inventories, gasoline stocks change and distillate stocks, as well as Brazil’s balance of trade.
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