On Monday, the dollar fell while stock markets eked out modest gains as investors approached the U.S. presidential election with caution. With a U.S. Federal Reserve interest rate cut anticipated later this week, market participants remained on edge.
In the presidential race, Democratic candidate Kamala Harris and Republican candidate Donald Trump are nearly tied in opinion polls ahead of Tuesday’s vote. Analysts note that it could take days to determine the winner once voting concludes.
Frank Luntz, a Republican consultant and pollster, commented, “We are too evenly divided and polarized to suggest a red sweep. The Senate looks like it will swing Republican, but the presidency and the House are simply too close to call.”
Global markets reflected this uncertainty, with MSCI’s gauge of stocks increasing by 0.3%, while the dollar index, which measures the greenback against a basket of currencies, eased 0.29% to 103.63.
The dollar weakened against several currencies, falling 0.76% against the euro to $1.090 and 0.7% against the Japanese yen to 151.90.
In the U.S. Treasury market, which had previously priced in a Trump victory leading to higher yields, traders adjusted their positions following a surprising poll showing Harris leading in Iowa.
The yield on the benchmark U.S. 10-year note fell by 9 basis points to 4.28%, marking its largest daily decline since late August.
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European stocks remained flat, with energy stocks among the top gainers due to OPEC+’s decision to delay a planned output increase, which pushed oil prices higher. British stocks outperformed continental indexes, adding 0.4%, buoyed by the energy sector.
Analysts at Deutsche Bank emphasized the significance of the upcoming election: “Tomorrow will shape the direction of the world economy and geopolitics for the next four years.”
They warned of substantial uncertainty surrounding the election results, particularly regarding the tightly contested House of Representatives race.
U.S. stocks showed mixed performance as investors braced for the presidential election and the Federal Reserve’s expected rate cut decision later in the week.
By 10:30 AM Eastern Time, the S&P 500 was up 0.1%, while the Dow Jones Industrial Average was down 0.3% and the Nasdaq Composite rose 0.1%.
At the opening bell, the Dow fell 53.32 points to 41,998.87, the S&P 500 dropped 0.67 points to 5,728.13, and the Nasdaq fell 42.32 points to 18,197.59.
Oil prices rose after OPEC announced a delay in its planned December output hike by one month. Brent futures climbed 2.8% to $75.19, while U.S. West Texas Intermediate (WTI) crude increased by 3% to $71.64.
The outcomes of the elections, especially for Congress, could significantly influence global market dynamics. A divided U.S. House of Representatives and Senate would likely maintain the political status quo, while a Republican or Democratic sweep could lead to substantial fiscal changes.
Asia-Pacific markets mostly saw gains, with Hong Kong and Shanghai both closing higher, while Tokyo remained closed for a holiday.
In the eurozone, Paris and Frankfurt reported midday gains, and London added 0.6%, as the Bank of England is expected to cut its main interest rate later this week following a drop in inflation.
