Besides the US election, investors will also focus on the NPC of China standing committee meeting.
Financial markets have started with Asian shares damped and the dollar slightly relaxed ahead of a hectic week of the US election, which will go down the wire.
With the rate decisions made by the Federal Reserve, the Bank of England (BoE), the Reserve Bank of Australia (RBA), and the Norges Bank, investors will also access the monetary policy catalyst throughout the week.
The National People’s Congress (NPC) of China meeting, which is held from November 4 to November 8, will provide more information on previously announced measures.
There was reduced trading in Asia due to Japan being out on vacation. Still, the Morgan Stanley Capital International index of Asia-Pacific stocks outside of Japan increased by 0.7% after it fell from a five-week low.
US stock futures declines, with S&P 500 futures easing 0.14% and Nasdaq futures dropping 0.11%.
The euro increased by 0.4% at $1.0877, and the dollar was losing power, while the yen value increased by 0.7% to 151.88 USD.
Dealers stated a decline in the dollar was due to a poll showing Democratic candidate Kamala Harris, who unexpectedly gained a 3-point lead due to her popularity amongst female voters.
However, Harris and Republican candidate Donald Trump are virtually equal in opinion polls, but the outcome would not be known for days after the votes end.
According to Polymarket, there was a 48% chance of a red sweep, but it has now decreased to 36%. The probability of a Republican sweep has declined, and the Democrats have closed the gap, according to Tony Sycamore, an IG market analyst.
Harris would be a continuity candidate since analysts predicted that Trump’s immigration tax and tariff policies put upward pressure on inflation, bond rates, and the dollar.
Due to the Japan holiday, US treasury cash trade was closed in Asia, but futures saw a 10-tick rally.
Besides the US election, investors will also focus on the NPC of China standing committee meeting.
Chinese stocks had a strong start, with the CSI300 blue-chip index rising to 0.2% and the Shanghai Composite Index (.SSEC) to 0.2%. Hong Kong Hang Seng Index increased by 0.4%.
The country is considering issuing more than 10 trillion yuan ($1.4 trillion) in extra debt over the upcoming years to strengthen the fragile economy. This fiscal package will be boosted even further if Trump wins the election.
Leah Fahy, a China economist at Capital Economics, states that local government debt will benefit financial stability but would not affect demand since it primarily transfers debt to the central government balance sheet. As a result, any new borrowing approved for these policies would not help in fiscal gain.
The central bank meetings will focus more on the Fed as the markets are predicting to have a 25 basis points rate cut.
Due to the election and uncertainty over the upcoming fiscal path, there will be caution in recalibrating monetary policy.
After the budget by the Labour government, there was a sell-off in gilts, which caused the value of the pound to decline. It also complicated the decision of the BoE to reduce the rates by 25 basis points when it meets.
Sterling was last 0.4% higher at $1.2971 due to the declining dollar value, but later its decline changed to 0.3%.
Oil prices increased by over $1 after OPEC+ announced that it would postpone a planned December output increase by one month.
Brent futures increased by $1.18 (1.61%) to $74.28 a barrel. West Texas Intermediate (WTI) crude for the United States also increased by $1.18 a barrel to $70.67.
The price of spot gold increased to $2,737.75, which is 0.1% higher but low compared to its most recent record high.
