Market sentiment soured amid uncertainties surrounding next week’s US election, exerting pressure on stock markets. The euro strengthened due to rising inflation, while the US dollar weakened ahead of the upcoming non-farm payroll report.
ADVERTISEMENTGlobal markets extended their losses for the week, with uncertainties surrounding the impending US presidential election.
Major benchmarks across the US and Europe appear set to close lower, influenced by the closely contested race between Trump and Harris. Michael McCarthy, Market Strategist and Chief Commercial Officer at Moomoo Australia remarked: “The US election result that global markets fear most is a stalemate – no clear winner,” adding: “Such an outcome would almost certainly derail the four-year-plus bull market in US stocks, pulling down global shares as well”.
Meanwhile, the US dollar softened ahead of today’s non-farm payroll data amid expectations of a cooling labour market. Haven assets, such as gold, silver, and crypto-currencies, retreated from their weekly highs on Thursday, suggesting that investors are repositioning ahead of a potentially volatile period.
Yields on government bonds continued to rise amid inflation concerns, further fuelled by the ‘Trump Trade’. Crude oil rebounded from Monday’s sell-offs as traders reassessed Middle East tensions and Chinese economic data.
Europe
The Eurozone’s headline inflation rose to 2% in October from 1.7% the previous month, according to Eurostat’s flash estimate. Core inflation remained steady at 2.7% year-on-year, also exceeding expectations. This data may prompt the European Central Bank to adopt a more cautious approach to rate cuts, bolstering the euro, which reached a near two-week high against the US dollar.
European stock benchmarks all recorded declines this week. The Euro Stoxx 600 fell by 2.61%, Germany’s DAX dropped by 1.98%, France’s CAC 40 lost 1.96%, and the UK’s FTSE 100 slipped by 1.68% over the past five trading days.
At a sector level, all categories posted weekly losses due to risk-off sentiment, with the technology sector as the largest laggard. ASML shares declined by 6.64%, while SAP shed 1.76%. These declines mirrored Wall Street’s downturn, as the performance of major US tech companies weighed on growth stocks globally.