The calm before the storm

A buoyant finish on Wall Street and a strong session in Asia is rolling over into Europe on Tuesday after investors remain upbeat following solid manufacturing data from across the globe. Oil is slipping lower and gold is holding steady as attention turns to the US elections

US manufacturing activity expanded by more than expected in October, new orders surged by the most in 17 years. Chinese factory activity accelerated at the fastest pace in 10 years whilst the manufacturing sector in Europe also saw a pick-up in momentum.

US election in focus
Today, the economic calendar is relatively quiet in the UK and Eurozone, with events on the other side of the Atlantic expected to drive sentiment as attention switches firmly to election day. Investors are bracing themselves for plenty of market moving headlines later tonight which is expected to bring significant volatility.

Joe Biden has been leading in the national polls by a comfortable 7 points for some time now, although the race is tighter in some key swing states, which will decide the election.
Should Joe Biden manage to win the race, a blue wave, which includes control of the Senate is needed for the markets to really get excited about stimulus. A Republican controlled senate indicates more gridlock to come and the markets will need to drastically scale back stimulus expectations.

The topic of additional fiscal stimulus in the US has been a market moving topic over the past few weeks amid failed attempts to break the gridlock. There is a good chance that the markets are more focused on the prospect of a large fiscal stimulus

Oil resumes selloff
Oil prices are sliding lower on Tuesday after a severe bout of volatility at the start of the week. Oil dived to a 5-month low early on Monday, but as the mood in the broader market improved the price of oil picked up, boosted further by Russia. The oil producing major indicated that it was open to the idea maintaining output cuts rather than unwinding them.
Today, the bears are taking back control as concerns over surging covid cases, more lockdown restrictions, political jitters in the US and rising production in Libya are overshadowing optimism that major producers could hold back on planned production increases.

AB Foods sees profits tumble
AB Foods announced a 40% fall in full year earnings after the covid hit from closed Primark stores overshadowed stronger performance in its grocery, sugar and ingredients divisions. Primark’s profits plunged to £362 million from £969 million reflecting temporary store closures from the first wave. With a second wave of covid, lockdown 2.0 starting in a matter of days and AB Foods earmarking a £375 million loss from the second round of temporary closures, Primark’s lack of online presence is really being felt.

FTSE Chart

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.