United States
U.S. stocks fluctuated between gains and losses as investors nervously awaited the U.S. election outcome. The S&P 500 traded at 5,717.89, down 10.85 points, or 0.19%. Similarly, the Nasdaq Composite dipped slightly, trading at 18,213.36, a drop of 26 points falling 0.11%, while the Dow fell 243 points to 41,809.28, marking a 0.58% decline. Sector performance was mixed, with five sectors gaining and six declining; the Energy sector led gains as oil surged nearly 3%, while utilities saw the biggest losses.
Announced changes to the Dow Index components on Friday impacted individual stocks: Nvidia, set to be added at week’s end, rose 1.55%, gaining $2.10 to trade at $137.51. Intel, however, dropped 3.00% to $22.50, down 70 cents, as it faces imminent removal from the index. Tesla also declined by 2.43%, closing at $242.94, down $5.84.
Berkshire Hathaway A shares slipped 2.1% to $663,750 after reporting a 6% drop in operating earnings. The company disclosed an increase in cash reserves to over $300 billion, stemming from the sale of major stakes in Apple and Bank of America, while also pausing share repurchases. Warren Buffett stated he would only repurchase stock if “the repurchase price is below Berkshire’s intrinsic value, conservatively determined.”
Energy stocks were up, with Exxon rising 3.05% to $118.46, and ConocoPhillips gaining 1.27% to $109.21. Solar companies also benefited from a recent Iowa poll favouring Harris in this key swing state, with First Solar jumping 5.59% to $216.31, and Enphase gaining 4.39% to $87.20. Conversely, nuclear power suppliers fell after the Federal Energy Regulatory Commission denied Tallen Energy’s request to increase power delivery to Amazon’s data centre campus. Tallen was part of the consortium announced earlier in the year to supply nuclear power to Amazon. Constellation Energy, which also has supply agreements for AI centres with other tech companies, plunged 11.52%, while Vistra dropped 3.03%.
The U.S. dollar weakened as polls indicated a slight lead for Harris over the weekend, pushing the U.S. dollar index down 0.35% to 103.88. The Euro gained 0.4%, reaching 1.0879. Bond yields pulled back slightly, with the 10-year yield down 7 basis points to 4.31%, and the 2-year yield declining 3 basis points to 4.17%. Following the election, the Fed will announce its interest rate decision on Thursday in the U.S.
Note: Due to recent clock changes in the U.S. over the weekend, all U.S. market prices are as of 7:15 a.m. Sydney time (3:15 p.m. NY).
Europe
European shares dipped as traders awaited the U.S. election results. The Euro Stoxx 600 declined by 0.33%, down 1.69 points, closing at 509.21. Most sectors fell, with technology leading the declines, while financials and energy sectors recorded modest gains. Germany’s DAX slipped 0.56%, losing 107.12 points to settle at 19,147.85, and France’s CAC dropped similarly by 0.50%, down 37.40 points to end at 7,371.71. In the UK, the FTSE 100 inched up by 7.09 points, a 0.09% gain, closing at 8,184.24.
The FTSE was supported by gains in the oil and gas sector, as oil prices rebounded by 2.5%. British Petroleum rose 1%, while Shell climbed 0.60%. The financial sector was bolstered by banks, with NatWest shares increasing by 2.61% after broker upgrades and an announcement that the UK government had reduced its stake. HSBC also rose, up by 1.14%.
Anglo American slipped 0.23% following its announcement of plans to sell a 33% stake in a joint venture holding a 70% interest in the Jellinbah East and Lake Vermont steelmaking coal mines in Australia for A$1.6 billion. This sale initiates its restructuring plan, aiming to divest peripheral assets after a hostile bid from BHP earlier this year.
In other market movements, Volvo’s shares surged 3% due to strong October sales driven by fully electric and plug-in hybrid models sold in Europe. Burberry saw a 4.8% jump following news reports of potential acquisition interest from rival luxury brand Moncler.
Bond yields were mostly steady. Germany’s 2-year bund yield added 1 basis point to reach 2.25%, while the 10-year bund yield fell by 1 basis point to 2.39%. In the UK, yields rose slightly, with the 10-year yield up by 1.5 basis points to 4.455%, and the 2-year yield increasing by 1 basis point to 4.42%.
Australia
The ASX200 futures are trading lower by 37 points, a drop of 0.45% at 7.15am Sydney time. The AUDUSD gained slightly overnight trading at 0.6588 on US dollar weakness.
The Australian market rose on Monday, buoyed by a positive lead from overseas markets. The ASX200 gained 0.56%, or 45.8 points, closing at 8,164.50. Nine of the eleven sectors moved higher, led by technology and utilities, while energy and materials lagged.
In technology, Wisetech continued its rebound, with shares up 2.55% to $121.52, a gain of $3.02. TechnologyOne also performed well, adding 2.47% to reach a record high of $24.91, a 60-cent increase.
The financial sector rose 0.84%, bolstered by Westpac’s first-half results, which reported a net profit of $7 billion, down 3% as mortgage competition impacted earnings. The bank increased its dividend to 76 cents for the half and announced a further $1 billion buyback. Westpac shares rose 30 cents, or 0.93%, to $32.40. CBA advanced 1.59%, closing at $144.30 with a $2.26 gain.
Utilities saw gains, with APA Group and NZ Meridian Energy rising 2.79% and 2.64%, respectively. Energy stocks, however, failed to benefit from a slight bounce in oil prices following OPEC+ news of delayed production increases. Woodside fell by 7 cents, or 0.29%, to $23.98, while Whitehaven Coal declined by 1.87%, down 13 cents to $6.82.
Iron ore prices edged higher, but iron ore producers declined, with Fortescue dropping 27 cents, or 1.39%, to $19.92, and Rio Tinto falling 1.31% to $119.74. Mineral Resources plummeted 9.63% after releasing a report on CEO Chris Ellison’s conduct. The board imposed an $8.8 million penalty on Ellison, primarily through forfeited bonuses. Additionally, the current chairman will step down by next year’s AGM, and Ellison will transition out of the CEO role within 12-18 months. The board acknowledged “shortcomings that demanded a strong and comprehensive governance response.” Mineral Resources shares dropped $3.91 to $36.70.
Bond yields were mixed, with the 10-year yield rising by 2 basis points to 4.56% and the 2-year yield declining by 1 basis point to 4.05%. The RBA meets today and is widely expected to leave rates on hold at 4.35%. The commentary around last month’s quarterly CPI will be of interest to investors.
Commodities
The announcement that OPEC+ intends to delay its planned December output increases by a month pushed West Texas crude prices up by US$2.03, a 2.91% gain, to US$71.52. Brent crude also rose, gaining 2.69% to reach US$75.08, up by US$1.99. Analysts suggested that OPEC+’s continued delays in increasing production may indicate uncertain commitment to raising output at all into 2025. Additionally, Middle East tensions and the upcoming U.S. elections contributed to a heightened market atmosphere. Adding further pressure to oil prices, a developing hurricane, soon to be named Rafael, is forming in the Caribbean with a projected path toward the Gulf of Mexico.
Iron ore extended gains from the Asian session, trading at US$104.25 in New York, up 33 cents. The commodity has risen by 2% since Friday, adding US$2.11 overall. Copper prices also increased, rising by US$126 to close at US$9,696 per tonne on the London Metal Exchange (LME), marking a 1.3% gain. This increase was supported by a weaker U.S. dollar and expectations that the week-long meeting of China’s top lawmakers, which began Monday, will lead to additional stimulus measures. The National People’s Congress Standing Committee is expected to introduce resources aimed at boosting local government support and aiding debt-burdened state lenders.
Gold saw a slight pause, with a marginal increase of US$2.50, trading at US$2,739.35 for a gain of 0.10%. Traders are awaiting further developments later in the week. Silver was nearly unchanged at US$32.51, marking only a slight rise from Friday’s close. Meanwhile, Bitcoin fell by US$1,614 to US$67,900, a 2.3% decrease from Saturday, as traders took profits in light of the closely contested election. Market sentiment suggests that a Harris win could push Bitcoin down to the US$50,000 level, while a Trump victory might drive it to new highs above US$75,000.
Economic Calendar
AU:
- RBA Interest rate Decision – 2.30pm
US:
- Trade Balance (Sep) – 12:30am
- ISM Services Index (Oct) – 2:00am
- US Presidential Election
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
