The futures market anticipates an upward opening in the European stock market and also on Wall Street, although with slight increases in the main market references. This Tuesday, November 5, investors focus their attention on the presidential elections held in the United States and where the citizens of the country are called to choose your next leader. With surveys that practically advance a tie between Kamala Harris and Donald Trumpthe result of the elections will overlap with the meeting of the United States Federal Reserve that will take place this Thursday.
However, this Tuesday the latest macroeconomic data known in China will also be quoted. The Asian stock market was carried away by the increases after the publication of the evolution of the service sector in Chinawhich has expanded at the highest speed since July. Likewise, the country’s authorities are reviewing their proposal that aims to reduce the financial burden on local administration to support the economy as a whole. With these data, the continental Csi 300 index rises almost 1.9% while the Japanese Nikkei advances 1.45%.
With investors’ attention on the US elections, the Ibex 35 accumulate several sessions stuck under 12,000 points and without crossing this technical reference. The Spanish selective has been consolidating positions laterally for twenty-seven sessions between the support of 11,560/11,600 points and the resistance zone of 12,000 integers. “There will be no changes within the bullish situation of the Spanish selective as long as it does not lose that support of 11,560/11,600 points, which is the yellow line or level that should be monitored in the short term,” commented the technical advisor of ecotraderJoan Cabrero. Thus, from a technical analysis perspective, the Ibex 35 is in the middle of a lateral phase that could be called no man’s land where neither the bears nor the bulls have control.
“The transfer of the rank of support of 11,560/11,600 points would be anything but bullish for Spanish equities, opening the door from then on to a probable larger consolidation that could seek, in the worst case, 10,900/11,000 points,” according to the expert from the investor portal elEconomista.es. However, there would be intermediate support in the area of 11,140 points, which are the September lows, and which could stop the fall before seeing those 11,000 points. To buy the Spanish stock market, the Ecotrader advisor indicates this area between 11,000 and 11,138 points to place purchase orders. For more aggressive options, it could be done earlier with stop protection at 11,560/11,600 points.
The US dollar was also conditioned during the election campaign. Although the monetary policies of the Federal Reserve have greater implications for the currency, the truth is that the proposals of the Democratic candidate, Kamala Harris, and those of the Republican, Donald Trump, have different implications for the currency most used by the market. The dollar regained ground against the next ten most important currencies in the market. And, since the lows seen in September, the dollar leads the basket of major currencies by 3.3% and is at an increase of 1% to return to the highest levels of the yearon average against currencies such as the euro, the pound, the Swiss franc or the Japanese yen.
Where the most difference is seen is in the crossing with the Japanese yen. The Japanese currency is one of the assets that has been most affected by the US elections. A priori, a Kamala Harris victory would favor the yen if the United States Federal Reserve maintains the roadmap that began with the presidency of Joe Biden. On the other hand, a Republican victory may be more focused on supporting the US economy with tariffs on China, among other measures, which could make the interest rate cut anticipated by the market difficult, according to Bloomberg. From the highs that the yen reached this year, where a change of 140 yen per dollar was seen, the Japanese currency has fallen more than 7.7% to current levels (152.3 yen per dollar).
The debt market was also carried away by the volatility of not having a clear winner in these presidential elections. The ten-year US bond registers a rebound in yield that takes the benchmark up to 4.3% return. And in mid-September the US bond fell to 3.6%. With this drop in bond prices (they move inversely to the profitability in the secondary market) the Investor faces losses again amid lower rates of interest.
The elections in the United States also affected the rest of the sovereign bonds. The news takes the ten-year German bond to the 2.4% area and the Spanish bond above 3.1%. That is to say, in Europe the same effects are also seen as on the other side of the Atlantic despite the fact that efforts of the European Central Bank In terms of rate cuts they are ahead of US monetary policy. Today, if an investor had purchased a diversified portfolio of investment grade sovereign bonds, they would be losing 1.1% in 2024, according to Bloomberg.
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