Macro Roundup (Nov 5)

Published: Nov 5, 2020 08:29
The dollar gained against a basket of currencies on Wednesday after Democrats looked unlikely to take control of the U.S. Senate, leading investors to unwind bets that a large fiscal package is likely.

SHANGHAI, Nov 5 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar gained against a basket of currencies on Wednesday after Democrats looked unlikely to take control of the U.S. Senate, leading investors to unwind bets that a large fiscal package is likely.

Democrat Joe Biden held a narrow lead in Wisconsin on Wednesday after officials completed their vote count in the pivotal state, a major boost in his quest to win the U.S. presidency from Donald Trump.

A so-called “blue wave” of votes for Democrats did not emerge as many had expected, however, making it likely that Republicans will maintain control of the U.S. Senate, and oppose any massive stimulus spending increase.

On Wall Street, stock index futures gyrated in overnight trading on Wednesday as investors hoped that the winner of the U.S. presidential election would be determined soon.

Futures contracts tied to the Dow Jones Industrial Average shed 21 points after initially moving higher out of the gate. S&P 500 futures were marginally lower, while Nasdaq 100 futures advanced 0.3%.

Late Wednesday, NBC News projected that former Vice President Joe Biden was the winner in Wisconsin and Michigan, both states that President Donald Trump won in the 2016 presidential election. Biden would then be just 17 Electoral College votes away from winning, NBC News reported Wednesday.

Oil prices jumped on Wednesday after President Donald Trump falsely claimed victory in a tight U.S. election with millions of votes still to be counted and after data showed a large decline in U.S. crude inventories.

A victory by Trump is viewed as bullish for oil because of sanctions on Iran and his support for Saudi-led oil production cuts to support prices.

A contested result and prolonged uncertainty is seen as the most bearish outcome for oil and markets in general, while a win for Joe Biden would be seen as bearish to neutral because of his support for green policies and softer stance on Iran.

Gold prices fell on Wednesday as bets that the Democrats will be unable to take control of the U.S. Senate in the razor-edge American election dashed hopes for a larger U.S. coronavirus stimulus.

Spot gold fell 0.7% to $1,896.02 per ounce. U.S. gold futures settled down 0.7% at $1,896.20.

Prices fell more than 1% earlier in the session as the dollar emerged as the favoured safe haven, with President Donald Trump falsely claiming victory with millions of votes still uncounted in the tight presidential race.

“It's becoming quite expected that the senate is not going to shift towards the democrats and now that we’re realistically in a divided government scenario, we’re unlikely to get the same type of stimulus that the market was hoping for,” said Bart Melek, head of commodity strategies at TD Securities.

On the data front, final euro zone purchasing manager’s index (PMI) readings for October came in at 50.0, down from 50.4 in September, indicating that the bloc’s economy stalled as coronavirus cases resurged across the continent.

Euro Area Retail Sales MoM for September and US weekly jobless claims as of October 31 are set to release today.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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