News & Analysis

Week Ahead: US Election Week

November 2, 2020

By Deepta Bolaky
 @DeeptaGOMarkets

Without any doubt, the event of the week will be the US election which will take place on Tuesday, the 3rd of November 2020. Amid a busy economic calendar, we will also see more central banks holding their policy meetings.

Equity Markets

October was another wild month for the stock market driven by geopolitics and the rapid resurgence of the coronavirus across the US, European countries, India and Russia forcing some leaders to reimpose national lockdowns. The recent themes will remain the dominant driving factors of the stock market this week:

US Election Night

In a pandemic-induced environment, the stakes are probably much higher for this election because markets are not only concerned about the next President but are more interested in knowing which party will hold a majority in the Senate and the House of Representatives. 

The political gridlock in Congress has hindered the relief fiscal support the US economy needed during this pandemic. Just one day ahead of the election day, investors are mostly concerned with:

  • The composition of the House and Senate
  • A potential for contested results
  • A delay in calling the election due to a substantial increase in mail-in/absentee balloting

They will eye the election night for a clear result on Tuesday.

Brexit

Brexit headlines have been on the positive side in the last few days with both the UK and the EU officials appearing close to finding a solution to their biggest obstacles. Investors will likely monitor the updates coming from both sides to see if the November deadline set by both sides will be met. 

Central Banks 

Major central banks like the BoE, the Fed and the RBA will hold their policy meetings this week. As widely expected, the BoE will likely keep interest rate unchanged but will ramp up its quantitative easing program. 

On the other side, it is unlikely that the Fed will alter any of its policies during the election week. However, it will be interesting to see the tone of the central bank about the rising number of COVID-19 cases. 

The RBA will probably be the most interesting central banks meeting this week. Following a series of dovish comments from policymakers and in recent speeches, there have been growing calls for a rate cut from 0.25% to 0.1% lately. This historic cut could be on the table at this meeting alongside some QE program.

US Earnings

After one of the busiest weeks on the earnings front last week, the US earnings season winds down this week. 

Key Economic Data to Watch

US NFP

It will be a busy week for the US markets and the US dollar this week with the elections and the Fed’s meeting. The employment report due at the end of the week will be another key event to monitor. Unemployment has soared to the worst levels around the globe and with the ongoing virus crisis, investors will be keen to monitor how the labour market is improving. 

PMI Figures

A series of manufacturing and services PMI figures across Australia, UK, China, Germany, Eurozone, and the US will be released this week allowing investors to keep track of the recovery or expansion seen in major economies recently. 

Commodities

Oil

Further national lockdowns have worsened the oil demand outlook. Crude oil prices will likely remain pressurised by the uncertainty on the demand side. In the meantime, traders will likely monitor the weekly oil reports for fresh trading impetus. 

Gold

A stimulus gridlock in the US and a stronger greenback have underpinned the demand for gold. The XAUUSD pair struggled to trade around the key psychological level of $1,900. As of writing, the precious metal was trading around $1,876. The election night will probably bring some clarity for gold traders. 

Key Events Ahead

Monday

  • AiG Performance of Mfg Index, Commonwealth Bank Manufacturing PMI, TD Securities Inflation and Building Permits (Australia)
  • Building Permits (New Zealand)
  • Caixin Manufacturing PMI (China)
  • Markit Manufacturing PMI (Germany)
  • Markit Manufacturing PMI (UK)
  • Markit Manufacturing PMI (Canada)
  • Markit Manufacturing PMI, ISM Manufacturing Employment Index, PMI, Prices Paid, and New Orders (US)

Tuesday

  • Eurogroup Meeting (Eurozone)
  • RBA Interest Rates Decision and Rate Statement (Australia)
  • Consumer Price Index (Switzerland)
  • Presidential Election and Factory Orders (us)
  • GDT Price Index (New Zealand)

Wednesday

  • AiG Performance of Construction Index, Commonwealth Bank Services PMI, and Retail Sales (Australia)
  • Participation Rate, Labour Cost Index, Employment Change and Unemployment Rate (New Zealand)
  • BoJ Monetary Policy Meeting Minutes (Japan)
  • EcoFin Meeting (Eurozone)
  • Caixin Services (China)
  • Markit PMI Composite (Germany)
  • Markit PMI Composite and European Commission releases Economic Growth Forecasts (Eurozone)
  • ADP Employment, Trade Balance, Markit Services PMI, Markit PMI Composite, ISM Services New Orders Index, Services PMI, Services Employment Index and Prices Paid (US)

Thursday

  • Imports, Exports, Trade Balance (Australia)
  • Factory Orders (Germany)
  • Retail Sales (Eurozone)
  • Bank of England Monetary Policy Report, BoE MPC Vote, Monetary Policy Summary, BoE Asset Purchase Facility, Bank of England Minutes, BoE Interest Rate Decision, and Governor Bailey Speech (UK)
  • Jobless Claims, Nonfarm Productivity, Unit Labor Costs, Fed Interest Rate Decision, Fed’s Monetary Policy Statement and FOMC Press Conference (US)

Friday

  • Overall Household Spending (Japan)
  • RBA Monetary Policy Statement (Australia)
  • RBNZ Inflation Expectations (New Zealand)
  • Industrial Production (Germany)
  • Nonfarm Payrolls, Average Hourly Earnings, Labour Force Participation Rate, and Unemployment Rate (US)
  • Unemployment Rate, Participation Rate, Average Hourly Wages, Net Change in Employment, and Ivey Purchasing Managers Index (Canada)

By Deepta Bolaky
 @DeeptaGOMarkets

Tuesday, 03 October 2020 
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
0 0 0.164 0.014 0 0 0
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 0 0 0 0 0


Disclaimer:  The articles are from GO Markets analysts,  based on their independent analysis or personal experiences. Views or opinions or trading styles expressed are of their own;  should not be taken as either representative of or shared by GO Markets.  Advice (if any),  are of a ‘general’ nature and not based on your personal objectives, financial situation or needs.  You should therefore consider how appropriate the advice (if any) is to your objectives, financial situation and needs, before acting on the advice.  If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.

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