Global equities showed a mixed performance on Monday as investors hesitated ahead of the US presidential election. Key US, European, and Asian markets saw cautious movements, driven by the election’s potential impact on economic policies and broader global trends. Here’s an in-depth look at market reactions across regions and sectors.
Overview of Global Market Movements
US Markets Hold Off on Major Moves
On Monday, US markets saw mild declines as investors refrained from significant trades with the upcoming election between Vice President Kamala Harris and former President Donald Trump:
- S&P 500 declined by 0.28%
- Dow Jones Industrial Average slipped by 0.61%
- Nasdaq dropped 0.33%
The decline in technology shares was notable, while banking and energy stocks provided some support as rising oil prices followed OPEC+’s decision to delay production increases. Treasury yields fell, reflecting bond market strength as investors unwound election-related trades.
European Markets Mirror Cautious Sentiment
European indices mirrored US market caution, with the Euro Stoxx 50 index declining by 0.6%. Investors held back, awaiting critical economic indicators and potential shifts tied to the US election results. Energy and financial sectors showed resilience, in contrast to underperformance in the tech sector, which reflected investor concerns over inflation and rate pressures.
Asia Market Highlights
Asian markets experienced varied results on Tuesday as caution continued to shape the investment climate:
- China’s equity markets rose on strong services PMI data and optimistic expectations for further fiscal support from Beijing. The Caixin/S&P Global services PMI rose to 52.0 in October, up from 50.3, signaling the fastest sector growth in three months.
- Australia’s ASX 200 declined following the Reserve Bank of Australia (RBA) decision to maintain interest rates at 4.35%, emphasizing inflation control.
- South Korea’s KOSPI dropped as weaker inflation data weighed on sentiment, while Japan’s Nikkei advanced as investors maintained a positive outlook.
- Indian markets anticipated a muted start, reflecting regional caution.
Oil Prices Remain Steady Amid Asian Trade
Oil prices held steady on Tuesday during Asian trading hours after recent gains. Market participants awaited guidance from the US election outcome and a significant political meeting in China. With OPEC+ delaying production hikes, the supply outlook tightened. However, concerns over weaker Chinese demand and heightened Middle East tensions continued to limit long-term oil price gains.
Key Sector and Company Updates
Corporate Moves and Market Reactions
- Burberry shares rose by 6% on Monday on rumors of a possible acquisition by Moncler to form a leading outdoor clothing group. Both companies declined to comment on the speculation, with analysts cautious about its likelihood given Moncler’s recent integration of Stone Island.
- Meta Platforms reportedly plans a €5 billion investment in EssilorLuxottica, potentially acquiring a 4-5% stake and discussing a possible board seat. This investment would deepen the partnership on Ray-Ban smart glasses, which saw stronger sales with the latest release in 2023.
- Carrefour SA is exploring options to boost its valuation, potentially through asset sales, acquisitions, or restructuring. Shares rose over 5% following this announcement, with a full or partial sale considered among its strategic options.
Schneider Electric, Constellation Energy, and Ryanair Updates
- Schneider Electric’s shares declined after the announcement of Olivier Blum as the new CEO, replacing Peter Herweck over differing views on strategic direction. RBC Capital Markets raised concerns about the company’s growth targets, while analysts expect a smooth transition given Blum’s experience.
- Constellation Energy fell over 12% after a regulatory setback. The Federal Energy Regulatory Commission blocked a nuclear power agreement with Amazon, casting uncertainty over future partnerships with tech firms.
- Ryanair CEO Michael O’Leary highlighted easing fare declines, projecting possible fare growth next summer. The airline’s six-month profits fell by 18% amid a 10% drop in fares. Ryanair also adjusted its 2026 passenger target due to delays in Boeing deliveries, potentially supporting future profitability.
US Election Impact on Big Tech
Wedbush analysts suggest that the US election outcome could heavily influence Big Tech, especially within the context of US-China tech tensions. A Trump victory may intensify tariffs and supply chain challenges, adversely impacting companies like Nvidia and Apple. In contrast, a Harris win could offer a more favorable environment for these companies. Despite election uncertainties, Wedbush maintains a positive stance on Big Tech, highlighting the sector’s robust AI and cloud growth.
Economic Policy Updates and Corporate Earnings
Reserve Bank of Australia Holds Rates Steady
The Reserve Bank of Australia (RBA) maintained its interest rate at 4.35% on Tuesday, emphasizing its focus on controlling inflation, which remains above the 2-3% target. The RBA noted that restrictive policies would remain until inflation sustainably trends towards target levels, expected by 2026. The Australian dollar rose modestly following this announcement.
Mixed Results in Corporate Earnings Reports
Several major companies reported earnings impacted by economic challenges and consumer behavior trends:
- Marriott International lowered its annual profit forecast due to weak domestic travel demand in China, with third-quarter revenue per available room (RevPAR) down by 7.9% in Greater China. Despite a strong group travel demand, Marriott missed earnings expectations.
- Palantir Technologies raised its full-year guidance on strong Q3 earnings, supported by increased demand for AI solutions. Q3 revenue rose to $725.5 million, with customer growth of 39% year-over-year.
- Chemours exceeded Q3 estimates, reporting EPS of $0.40, with record sales in its Thermal & Specialized Solutions segment. However, it warned of a Q4 sales decline and announced $250 million in cost-cutting measures by 2027.
Analyst Perspectives on Emerging Market Trends
Upgrades and Downgrades
- Bank of America upgraded Peloton to “Buy,” raising its target price to $9, citing EBITDA growth potential under incoming CEO Peter Stern. Peloton’s cost-cutting and operational efficiencies, alongside growing treadmill demand, were key factors in the upgrade.
- Morgan Stanley downgraded STMicroelectronics to “underweight,” projecting a challenging fiscal 2025 amid expected automotive sector declines and weaker electric vehicle demand. STMicroelectronics also faces inventory pressures, under-utilization, and pricing competition in China.
For more information visit https://cc.com.mt/. The information, views, and opinions provided in this article are solely for educational and informational purposes and should not be construed as investment advice, advice concerning investments or investment decisions, or tax or legal advice.
