MARKET WRAPS

Watch For:

Manufacturing PMIs for France, Germany and Eurozone; trading updates for Ryanair

Opening Call:

European stock futures were little changed after Asia markets traded flat, as investors kicked off a week of major events, including the U.S. presidential election and the FOMC meeting. The dollar fell while oil and gold rose amid high implied volatility.

Equities:

European stock futures were little changed as Asian markets were mixed, with investors bracing for further volatility in stocks until the results of the U.S. presidential elections are finalized, alongside the House and Senate races.

Markets are also anticipating the Fed's latest decision on interest rates on Thursday. Many expect the Fed to lower rates by 25 basis points.

Key events in the eurozone this week include manufacturing orders and industrial production data from Germany, which would give further insight into the severity of the economic slump in Europe's largest economy, after avoiding a recession in the third quarter.

"Leading indicators dash hopes for a strong revival in September," as indicated in the recent slump in the purchasing managers' data on manufacturing activity and the fall in Ifo business sentiment indicator, HSBC said. "Reports of many major orders have been scarce for September, " HSBC said.

Final French, German and eurozone manufacturing purchasing manager surveys are due later in the day, followed by final services PMI data Wednesday. French industrial production data for September are released Tuesday, as well as an Ecofin meeting of EU finance ministers.

Forex:

The US dollar slightly weakened slightly amid high volatility.

"Implied volatilities across markets are highly elevated," said RBC, noting the VIX Index closed above 21 on Friday. EUR/USD's one-month implied volatility was above 8 and USD/JPY was at 13.

Carry trades, where investors borrow low-yielding currencies, such as the yen, to invest in higher-yielding ones, are typically vulnerable to substantial risks due to sharp fluctuations in markets, RBC added.

Bonds:

If Kamala Harris is elected president, policies are expected to follow Joe Biden's and Treasury yields would edge down to 4%, Capital Economics forecasted.

A Harris presidency may be particularly positive for emerging markets that stand to benefit from "friendshoring"--the rerouting of supply chains to countries seen as geopolitical allies, CE noted. It could be detrimental to China's economic prospects as Harris could keep coordinating with U.S. allies to limit tech exports to China.

The dollar would soften and global equities would keep gaining from the AI-driven bubble, CE added.

"That in turn would help keep risk appetite strong globally, supporting emerging-market assets," CE said.

Energy:

Oil rose amid prospects of rising geopolitical tensions in the Middle East, after the Israeli military said commandos had slipped deep into Lebanese territory in a sea raid and captured a senior Hezbollah operative.

Oil prices continue to rally amid fears of escalation between Iran and Israel disrupting oil supply, IG analyst Axel Rudolph said.

Metals:

Gold prices edged higher amid rising uncertainty.

There could be risk of a $100 correction this week in gold prices, depending on the election outcome, Saxo Bank said.

If the results prevent one party from gaining control of the White House and Congress, markets are likely to be concerned about excessive government spending, the bank added.

Saxo maintains a long-held bullish view on gold, thanks to concerns over fiscal instability, safe-haven demand and geopolitical tensions.

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Copper edged higher, trading in a narrow range, as markets were likely digesting last week's China PMI data, which showed factory activity unexpectedly expanding in October, ANZ wrote.

A Trump presidency could see demand for metals come under pressure if the Inflation Reduction Act is pared back as he has promised, ANZ added.


TODAY'S TOP HEADLINES

Harris and Trump command the market's attention - but Jerome Powell may steal the spotlight

Investors are anxious about the possibility that it could take days, or even weeks, for the results of this week's U.S. presidential and congressional races to be known.

But Tuesday's vote is hardly the only major market-moving event on the calendar. In fact, it's quite possible that Federal Reserve Chairman Jerome Powell could steal the show when he steps up to the podium on Thursday to deliver his postmeeting press conference.


Fed Prepares Rate Cut Amid Economic Contradictions

Federal Reserve officials are expected to cut interest rates by a quarter percentage point at their meeting Thursday because inflation has continued to make progress toward their 2% goal.

Officials began lowering rates at their previous meeting in September by making a larger half-point cut. They are trying to figure out where, exactly, rates should settle after high inflation over the past three years led to a dramatic series of rate increases.


Spain's Flash Flood Victims Caught in 'Worst Natural Catastrophe'

VALENCIA, SPAIN-When residents of La Torre, a neighborhood on the outskirts of the city, managed to pry open a garage on Mariano Brull Street, they were met with a tragic scene-the bodies of eight people, including one police officer.

The victims had rushed to their cars on Tuesday evening, as torrential rainfall began to hammer the region, the police said. Unable to leave in time, they drowned when an unexpected deluge of muddy water flooded the garage.


U.K.'s Tories Turn to a Black, Right-Wing Culture Warrior to Revive Party

Britain's opposition Conservative Party picked Kemi Badenoch as its new leader Saturday, betting that a relatively untested conservative culture warrior can reassert control over the right-wing of British politics after the party suffered a historic defeat at an election in July.

Badenoch, 44, who is the first Black woman to lead a major political party in Britain, campaigned on a platform of redefining the Tories as a party of pragmatism that cracks down on illegal immigration, trims the state and embraces cultural conservatism.


Big Pension Sold Palantir, Apple, and Nvidia Stock. It Bought AMD.

The third-largest public pension in the U.S. made major changes in some of its largest tech investments.

The New York State Common Retirement Fund, which covers New York State and Local Retirement System members, retirees, and beneficiaries, cut positions in Palantir Technologies, Apple, and Nvidia stock, and bought more Advanced Micro Devices shares in the third quarter. The pension disclosed the stock trades, among others, in a form it filed with the Securities and Exchange Commission.


Boeing Had a Big Week. This One Is Even Bigger.

Boeing simply needs to put the costly strike behind it.

It could happen on Monday, when tens of thousands of striking Boeing employees in the Pacific Northwest will vote on a tentative labor agreement reached on Oct. 31 that could raise wages by more than 40%, compounded, over four years.


Write to singaporeeditors@dowjones.com


Expected Major Events for Monday

07:00/ROM: Sep PPI

07:00/TUR: Oct CPI

07:00/TUR: Oct PPI

08:00/POL: Oct Poland Manufacturing PMI

08:15/SPN: Oct Spain Manufacturing PMI

08:45/ITA: Oct Italy Manufacturing PMI

08:50/FRA: Oct France Manufacturing PMI

08:55/GER: Oct Germany Manufacturing PMI

09:00/EU: Oct Eurozone Manufacturing PMI

16:00/DEN: Oct Foreign Exchange & Liquidity

16:59/AUT: Oct Unemployment figures

All times in GMT. Powered by Onclusive and Dow Jones.

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This article is a text version of a Wall Street Journal newsletter published earlier today.


(END) Dow Jones Newswires

11-04-24 0015ET