Mixed trend in Asia; Shanghai index jumps 1.8%

Trade overview: current reports, trends, indices, stock prices, bonds, foreign exchange and commodities and analyst recommendations

08:50

In Asia this morning, trading is mostly conducted with decent price increases – Nikkei rises by 1.3%, Shanghai and Hang Seng by 1.8% and 1.3%, Kospi index falls by 0.3%.

The positive sentiment in the Chinese stock market increased following the Purchasing Managers’ Index which showed that the country’s service sector rose much more than expected.

Wall Street futures are trading unchanged this morning.

Yesterday trading on Wall Street closed lower, investors are now preparing for the US presidential elections and a possible interest rate cut by the Federal Reserve on Thursday. The Nasdaq fell by 0.3, the Dow Jones and the S&P 500 fell by 0.6% and 0.2% respectively .

Nvidia During trading, it became the largest company in the world in terms of market capitalization and took first place from Apple, but withdrew towards the end of trading anddark Back to square one.

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Those who were looking for clues as to how much the market is pricing a victory today in the US presidential elections by this or that candidate found a few: investors believe that a Kamala Harris victory will be good for solar stocks. At least yesterday, on the eve of the elections, these stocks soared. The ETF TAN jumped by over 3%. Stocks stood out in it First Solar , Anphase Energy and even solaredge . However, the jump in solar stocks was also due to the decline in nuclear energy stocks.

The latter have recently benefited from rising demand from the field of artificial intelligence, but yesterday, the US Federal Energy Commission (FERC) rejected the plan of Amazon To use energy from a nuclear facility of Talen Energy (Talen Energy) to operate a data center. Talen noted that the FERC decision could create a “chilling effect” on similar projects. And so, the shares of Talen and the electric company Wistra decreased by about 3%, while a share Constellation Energy dropped by 10%.

Also to Harris’ credit, Bitcoin fell yesterday by about 1.5% to $67,800. The currency has risen in recent weeks, in accordance with Trump’s promise to make the US the “crypto capital”. Government bond yields have also fallen, while the market estimates that Trump’s election will actually lead to an increase in bond yields (see below).

In contrast, a share Trump Media jumped by 12%.

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Media company stock Fox jumped after reporting positive results for its first fiscal quarter. Fox posted an adjusted profit of $1.45 per share and revenue of $3.56 billion, above expectations.

On the other hand, a share New York Times fell more than 6% due to a decline in digital subscription additions in the third quarter, even though its digital advertising sales grew at the fastest rate in two years. At the same time, the employees of the technology unit of the media company announced a strike.

stock Palantir Soared 13% yesterday in late trading after the quarterly report. the company reported revenues of $726 million, a 30% increase compared to the same quarter last year, well above expectations.

In the US, as mentioned, government bond yields fell, analysts attributed the move largely to encouraging survey results for Kamala Harris. The ten-year bond yield decreases by 5 basis points to 4.31% and the two-year bond yield to 4.17%. The declines are a reversal of sorts after an earlier rise in returns stemming from bets on a Donald Trump victory.

The consensus on Wall Street is that a Trump presidency is likely to increase the federal budget deficit more than a Harris presidency. In addition, bond investors are concerned about his other proposals – such as limiting immigration and imposing extensive protective tariffs – which could increase the pressure on government bonds and cause an increase in inflation.

Regardless of the outcome of the election, investors expect the deficit to remain high in the coming years, which would require large issuances of government bonds and could put pressure on existing bonds.

In the currency market, according to data from the Bank of Israel in the third quarter that ended in October, the dollar weakened against most of the major currencies in the world. Among other things, the dollar weakened by 11.4% against the Japanese yen and by 4.5% against the euro.

In the commodity market, amid reports that Iran is planning to attack Israel, oil prices rose by about 3% yesterday. American oil traded at $71.4 per barrel and Brent at $75.

Macro in the US. Beyond the elections, investors await the Federal Reserve’s interest rate decision in November, expected on Thursday, and further clarifications from central bank chairman Jerome Powell regarding the bank’s policy in the future. Investors estimate with a probability of 98% that there will be a quarter percent reduction after the half percent reduction made in September.

If what was is what will be – Wall Street will go down in the coming days, but within a month the declines will be erased and by the end of the year, all indices will record increases. This is according to data from CNBC, which has followed the data of the leading indices on Wall Street since the 1980 election.

Stocks tend to rise after presidential elections, but history shows that investors should prepare for short-term volatility. According to CNBC data, the three major indexes have recorded increases on average between Election Day and the end of the year in the years in which presidential elections have been held since 1980 – the Dow Jones by 2.27%, the Nasdaq by 1.01% and the S&P 500 by 1.5%.

However, investors should not expect an immediate increase after the closing of the polls, since on average the indices register decreases the day after the elections and the week after up to about 1%. In many cases, stocks wipe out most of these losses within a month.

Therefore, according to CNBC, investors should not expect an immediate rally on Wednesday or the next few days, especially given the possibility that the presidential race, which is considered close, will not be decided until Wednesday morning. America, too, may have to wait for close results in congressional races to determine which party will control one of the legislatures.

“The election is now center stage as the next factor to affect the financial markets,” said Amy Ho, senior director of strategic research at JPMorgan Chase & Co. Morgan. “We warn that the uncertainty regarding the results of the elections may continue, as the approval process and vote counting may take days in the presidential race and weeks in the House of Representatives races.”

The elections are taking place against the background of a strong year for stocks, which brought the broad market to historic highs. With an increase of about 20%, 2024 marks the best first ten months of a presidential election year since 1936, according to the Bespoke Investment Group.