Major US stock indices rose ahead of the presidential election in the US. The outcome of the election will determine the future trajectory of the country's development amid the coronavirus pandemic and economic crisis.
Thus, the Dow Jones Industrial Average increased by 423.45 points (1.6%) and reached the level of 2,695.05, the S&P 500 rose by 40.28 points (1.2%) and stopped at 3,310.324, and the Nasdaq Composite gained 46.02 points (0.4%) and settled at 10,957.61.
Investors hope to see unequivocal and final election results. This will help avoid chaos in the country and in the markets and will give one of the parties control over the Senate and the House of Representatives. In turn, such smooth work of the US administration will ensure the clarity around a new stimulus package and new legislation in healthcare and taxation.
Many experts associate the growth of US stock indices this week with the approaching culmination of a tense election campaign. The upcoming outcome of the election is decreasing the level of anxiety among market participants.
Due to strong sell-offs seen last week and the S&P 500 plunging by more than 5%, some investors could have decided that the market was oversold. This may be a supporting factor for the stocks today. So, at the beginning of November, the S&P 500 is 7% behind the record highs reached in September. Back then, it declined sharply under the pressure from tech stocks. Concerns about the future presidential election in the US contributed to this decline.
Today, market participants have returned to buying stocks. After an active sell-off last week, many investors saw opportunities for profitable deals.
In addition, the upbeat economic data from the US supported the stock market. Thus, the US industrial sector was steadily expanding in October. Last month, the purchasing managers' index came in at 59.3 points, while economists polled by the Wall Street Journal predicted only 56 points. The increased demand for consumer goods and home appliances has helped manufacturing companies quickly recover from the spring downturn caused by the first wave of COVID-19.
Besides, new quarantine measures introduced in Europe do not look as harsh and lengthy as investors feared. For example, in the UK, Germany, Ireland, France, Austria, and Belgium, schools are still open, and the authorities hope that the new restrictions will be lifted in a few weeks.
However, let's go back to the news from the American markets where all the sub-indices of 11 S&P 500 sectors ended the session in positive territory. The largest growth is recorded in the oil and gas and industrial sectors, while the technology sector showed the worst results.
Twitter shares, which were down by more than 20% on Friday, dropped by another 4.6% today. The company attributes this negative trend to a small number of new users.
Clorox shares rose by 4.2% after the corporation's Q3 earnings exceeded analysts' forecasts. Estee Lauder Companies added 2.4% on unexpected gains in its quarterly earnings and sales.
Dunkin' Brands jumped by 6.5% earlier this week. At the end of last week, Arby's owner Inspire Brands announced that it was buying Dunkin' for $ 8.8 billion. This deal will be one of the largest in the restaurant sector over the past few years.
The Stoxx Europe 600 index gained 1.6%, with German and French stocks showing the best performance. By the way, on Monday, the quotes of Stoxx Europe 600 and Euro Stoxx 50 were unavailable for about an hour after the start of the session due to problems of the exchange operator Deutsche Borse Group with the calculation.
According to experts, the situation in the stock markets is slightly improving as the managers and companies' specialists began to see the ways of how to cope with the consequences of restrictive measures.
The commodity market is also quite stable. On Monday, oil prices steadied for a while, with Brent crude rising by 2.7% to $38.97 per barrel. Over the past few months, oil market has been under great pressure amid renewed quarantine measures and their negative impact on fuel demand. Last week, Brent fell by more than 10%, which was the highest weekly drop since April this year.
While the tense pre-election situation in the United States forces investors to take a wait- and-see attitude, Asia remains a safe haven for them. In this regard, the main stock indexes of the Asia-Pacific Region continue to grow steadily on Tuesday.
Thus, the index of the Shanghai Stock Exchange, Shanghai Composite, increased by 1.13% and reached the mark of 3,261.71, the Shenzhen Exchange Composite was up by 1.12% and settled at 2,248.12, the Hong Kong Hang Seng Index rose by 1.96% to 24,938.44, the South Korean KOSPI increased by 1.73% to 2,340.01, and, finally, the Australian S&P/ASX 200 rose by 2.08% and reached 6,074.8 points. Japanese stock exchanges were closed on Tuesday due to a national holiday. At the close of the session on Monday, the Japanese Nikkei 225 also gained 1.39% and settled at 23,295.48.
Today, investors in Asia share the optimism of US traders. On Monday, US stock markets closed with gains of 0.4 -1.6%. The positive sentiment was supported by the upbeat statistical data. Thus, the US manufacturing activity rose to 59.3% in October from 55.4% in September, exceeding analysts' expectations of 55.8%.
Meanwhile, the most exciting event for the US and Asian markets on Tuesday is the upcoming presidential election. The main rivals are the current President of the United States, Donald Trump, and the representative of the Democratic Party, Joe Biden. According to the latest data from national polls, Biden is more popular among the US citizens, but the situation in many states remains unclear. Experts think that the winner of the election may not be announced immediately. This uncertainty may have serious negative consequences for the markets.
