Markets become risk-averse ahead of US presidential elections - 4.11.2016

S&P500 falls for 8th straight day

US stocks were on decline on Thursday due to weak performance of Facebook shares and on rising political instability ahead of presidential elections. US dollar index, a measure of a greenback’s value against a basket of six major currencies, fell 0.25% to hover near 97.156. It has lost 1.2% so far this week ahead of presidential elections. Dow Jones industrial average lost 0.16% to 17,931.15 while Nasdaq composite slid 0.92% to 5,058.41. S&P 500 index dipped 0.44% to 2,088.69 in the 8th straight session of decline, its longest period of fall since the financial crisis of 2008. Facebook stocks tumbled 6% on profit warning. Investors have been concerned recently with upcoming US presidential elections and tightening race between the candidates. The polls show the chances for Republican Donald Trump and Democrat Hillary Clinton are almost equal with elections being only 5 days away. Markets begin to price in the chances for Trump’s victory. The CBOE volatility index surged 14% to the highest level since June. Upbeat US nonfarm payrolls will support the case of December rate hike. Today at 13:30 CET the US unemployment rate, change in nonfarm payrolls and average hourly earnings will come out, the outlook is positive for all. At 18:00 CET the Baker Hughes oil rigs data will come out in US. At 21:00 CET Fed’s Fischer speaks in Washington.

European stocks closed little changed on Thursday

European stocks closed little changed on Thursday after the decision of London court brought to naught the early gains. EURUSD was steady at $1.1100 having touched on Wednesday the 3-wek high of $1.1126. Pan-European STOXX EUROPE 600 closed flat. British Pound soared to 4-week high of $1.2494 after the Londo court ruled the British government had to gain Parliament’s approval to trigger Brexit and as the Bank of England left interest rates unchanged. BoE also expects the inflation to jump to 2.7% in 12 twelve months which is threefold above its current level. UK’s precious metal miners Randgold and Fresnillo slumped 6.3% and 4.3% respectively being the top decliners among FTSE 100 components. In Europe, Credit Suisse tumbled 7.1%. Nevertheless, European banking sector managed to close 1% higher with positive earnings update from Societe Generale which pushed its stocks 5.5% higher. ING bank shares advanced 2.3%. Today on Friday European stocks are looking down.

Asian stocks fell on Friday on political uncertainty in US

Asian stocks fell on Friday as risk appetite remains subdued on political uncertainty in US. MSCI’s index of Asia-Pacific shares outside Japan lost 0.4% on Friday and 1.7% so far this week. Japanese Nikkei lost 1.3% to 16,905.36, its lowest in 2 weeks. Broader Topix slid 1.6% to 1,347.04. In China CSI 300 index dipped 0.3% to 3,354.17 while Shanghai Composite Index fell 0.1% to 3,125.32. Hong Kong shares ended at a 2-1/2 low on Friday with materials and consumer sectors leading the decline. Hang Seng index lost 0.2% to 22,642.62 while HIS volatility index reached its high since Brexit vote this July.

Oil set for 6th day of decline in a row

Oil futures prices were falling today for 6th straight day on higher oil inventories in US and vague prospects of OPEC member reaching the oil cut deal. Brent crude futures edged lower to $46.18 a barrel while WTI oil futures were almost flat at $44.65 a barrel.