Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European shares traded lower. The uncertainty about the US presidential campaign will continue to affect the European markets. In addition to the direct impact, the resumption of uncertainty in the American political landscape increase the weakness of the dollar and therefore increase the strength of the Euro. The fall of the euro against the US dollar was reaching extreme levels and therefore increased the likelihood of a short-term recovery of the European currency. The recovery of Donald Trump in the polls was the element that materialized the technical conditions favorable to the European currency. Thus, in the short term, the most sensitive sectors to the Euro as automotive, industrial and luxury goods are the most vulnerable to continued appreciation of the common currency. These sectors have a more significant weight in the DAX.
US markets closed with sharp losses, justified by the growing uncertainty in the electoral campaign. The first time a major poll, the Washington Post, gave the lead to Donald Trump, forcing investors to reassess their prospects and positioning of their portfolios. Investors prefer that the power is divided between the two parties, making it difficult to adopt more radical measures, which could translate into uncertain consequences and uncertainty is the worst threat to the financial markets. Yesterday, the S & P broke the important support zone of 2116, which could generate a further increase in risk aversion and volatility. The meeting of the Fed, which began yesterday and ends today, will serve as a preparation for the December meeting. Given the proximity of the presidential elections, the Central Bank should not announce any change in interest rates, currently at 0.25% – 0.50%. Therefore, the main point of interest will be the statement of the meeting. In the September meeting, which had been guided by dissent within the executive committee of the institution, the Fed acknowledged that the arguments for an increase in interest rates had become stronger. Since then, the labor market has given signs of dynamism, wages maintained their trend of modest increases, inflation accelerated slightly, while the conditions of the other world economies apparently stabilized. Therefore, the statement from the Fed should resemble the September, recognizing again the odds of an increase in interest rates.
Asian markets closed lower, due to the uncertainty in the US elections, highlighting the loss of the Tokyo Stock Exchange. As a result of uncertainty in the elections next Tuesday, the dollar depreciated against the Yen, which had a negative impact on the stocks of the Nipponese exporters.