U.S. Equities, Crude Oil Gain Ahead of Election: Markets Wrap

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03 Nov 2020, 06:01 PM IST

U.S. Equities, Crude Oil Gain Ahead of Election: Markets Wrap

A trader talks on the phone while working on the floor of the New York Stock Exchange. (Photographer: Michael Nagle/Bloomberg)

(Bloomberg) -- U.S. stocks rebounded from the worst week since March as investors bet on the energy, materials and industrial sectors ahead of Tuesday’s U.S. presidential election. Crude oil rose the most in more than three weeks.

Dip buyers helped the benchmark S&P 500 finish up 1.2%, though it closed down from the highs of the day. It slumped 5.6% last week. The tech-heavy Nasdaq 100 lagged behind, weighted down by Apple Inc. and Amazon.com Inc. as investors rotated from so-called work-from-home stocks and into sectors that would benefit from more stimulus.

“There’s a lot of general positioning before this event, investors are a little bit jittery,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. “You layer in a few of the other uncertainties -- it’s still the Covid situation, with things going on in Europe and parts of the U.S. in the Midwest, investors were reminded that the uncertainty in that situation can still dominate markets.”

With one day before the American presidential election, volatility returned, with the Chicago Board Options Exchange’s Volatility Index, or fear gauge, remaining elevated. Polls continue to show Democrat Joe Biden ahead, though battleground states remain tight. The U.S. reported a slight slowdown in virus cases over the weekend, but several states continued to notch record numbers of infections.

Once the U.S. election passes, investors will contend with the Federal Reserve delivering a policy decision Thursday before the October jobs report Friday. Earnings will continue to roll in, with PayPal Holdings Inc., Expedia Group Inc. and Take-Two Interactive Software Inc. among the firms reporting.

Oil clawed back earlier losses amid signals that Russia, a key OPEC ally, is in talks to possibly postpone the group’s planned output hike in January. Russia, which depends on crude as a key export, saw the ruble weaken to the lowest level since March against the dollar.

Virus developments are also front and center, with daily cases continuing to surge in many parts of the world. The U.K.’s prime minister ordered England into a four-week partial lockdown, all but shuttering the economy, while other European countries prepared to increase restrictions.

“Going into an election, there’s always, always jitters, there’s volatility,” said Quincy Krosby, chief market strategist at Prudential Financial. “But we have the question mark regarding the surge of the coronavirus. And the question is, how much does it jeopardize the recovery?”

In other markets, gold advanced while the yield on 10-year Treasuries declined. The Bloomberg Dollar Spot index gained for a fourth day.

These are some key events coming up:

Earnings are due from companies including Nintendo Co., Macquarie Group Ltd., Toyota Motor Corp., Alibaba Group Holding Ltd. and AstraZeneca Plc.
U.S. Presidential election on Tuesday.
EIA crude oil inventory report on Wednesday.
Fed policy decision on Thursday.
The U.S. labor market report is due Friday.

These are some of the main moves in financial markets worldwide:

Stocks

The S&P 500 Index climbed 1.2% to 3,310.23 as of 4:02 p.m. New York time, the largest increase in three weeks.

The Dow Jones Industrial Average jumped 1.6% to 26,924.66, the biggest surge in almost four weeks.

The Nasdaq Composite Index rose 0.4% to 10,957.61.

The Stoxx Europe 600 Index surged 1.6% to 347.86, the biggest jump in five weeks.

The MSCI All-Country World Index surged 1.3% to 557.96, the largest jump in four weeks.

Currencies

The Bloomberg Dollar Spot Index rose 0.1% to 1,173.18, the highest in almost four weeks.

The euro decreased 0.1% to $1.1639, hitting the weakest in more than five weeks with its sixth consecutive decline.

The British pound declined 0.2% to $1.2918, the weakest in more than two weeks.

The Japanese yen depreciated 0.1% to 104.81 per dollar, the weakest in a week.

Bonds

The yield on 10-year Treasuries declined two basis points to 0.85%.

The yield on 30-year Treasuries declined three basis points to 1.63%.

Germany’s 10-year yield fell one basis point to -0.64%, the lowest in almost eight months.

Germany’s 10-year yield fell one basis point to -0.64%, the lowest in almost eight months.

Commodities

West Texas Intermediate crude surged 3.5% to $37.05 a barrel, the biggest jump in almost four weeks.

Copper rose 1.3% to $3.09 a pound, the largest rise in more than a week.

Gold strengthened 0.9% to $1,895.31 an ounce, the biggest rise in more than a week.