Global Market Cheers US Election Result, Earnings Boost EU Equities; US Traders Turn Focus To The FOMC

The FOMC is meeting today and expected to announce their policy statement Thursday afternoon. European equities indices were up strongly at midday as US election results remove an element of political uncertainty from capital markets.
Thomas Hughes
Global Markets

Asian Markets Mixed As Election Results Roll In

Asian equities indices closed mixed and flat in Wednesday’s session as results from US elections poured in. The results were largely as expected; the Democrats took control of the House while Republicans strengthened their hold on the Senate, and not expected to have much impact on international relations (between the US and the world). The Australian ASX led advancing indices with a gain near 0.40% while the Shang Hai Composite led decliners with a drop near -0.5%.

European Equities Up On Earnings And US Elections

European equities indices were up strongly at midday as US election results remove an element of political uncertainty from capital markets. The caveat is this; while the change of House leadership is expected to impose a check on Trump’s right-wing agenda, it is not expected to alter his trade policies. President Trump’s hard-line stance with trading partners is likely to continue.

Banking and retail stocks led gains in the EU as earnings and a ruling from the EU Supreme Court boost investor appetite. On the earnings front shares of Delivery Hero jumped more than 8% on earnings results and outlook that far surpassed expectations. Regarding the banking sector; the EU Supreme Court that Spanish banks are not responsible for paying taxes on mortgage loans alleviating concern the sector would be responsible for billions in past levies.

The French CAC led at midday with a gain near 1.10%. The UK FTSE 100 closely followed with a gain near 1.0% while the German DAX was trading near 0.80% higher.

US Traders Focus On The FOMC

With the US midterm elections over traders are breathing a sigh of relief. With the Democrats entrenched in the House, there is now a check on President Trump that promises two years of political deadlock in Washington. Traders are now focusing on what matters; the FOMC and earnings. The FOMC is meeting today and expected to announce their policy statement Thursday afternoon.

The FOMC is not expected to raise rates today, but they are expected to indicate a hike at the next meeting, data notwithstanding. Inflation data over the last two months continues to show steadily rising rates, a fact that supports the need for FOMC interest rate hikes, while the pace of growth has been slowing. The US Dollar Index hit an 18-month high over the last month as the outlook for FOMC tightening intensified but has since fallen to retest support at the $96.00 level. The overnight action saw the index surge after the initial election results only to fall under the pressure of resistance as US markets began to wake up.

The NASDAQ Composite led in early trading, indicated up by more than 1.0% in pre-market trading, and was closely followed by the Dow Jones Industrial Average and broad-market S&P 500.

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