US Futures Lower as Interim Payments Return Mixed Verdict: Markets Overview

(Bloomberg) — U.S. stock index futures fell as the midterm elections produced a mixed verdict, fueling expectations of a Republican victory and a congressional gridlock.

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December contracts for the Nasdaq 100 and S&P 500 retreated by at least 0.3 percent each, a day after U.S. stocks halted a three-day rally. The European equity index extended losses. The cryptocurrency selloff deepened, sending bitcoin to its biggest four-day drop since June. Treasuries fell and the dollar erased losses. Oil fell on weak demand outlook from China.

Stock and bond investors were hoping for a Republican return to Congress, with GOP control of both the House and Senate seen as the best outcome. Dollar bulls, on the other hand, were looking for Democratic control to continue in both houses. Trends so far suggest a mixed verdict, leaving little room for a rally or decisive sell-off.

“The Republicans’ goal of controlling both houses hangs in the balance,” Chris Beauchamp, chief market analyst at IG Group in London, wrote in a note. “A divided chamber may mean that partisan battles over spending and the debt ceiling are less dramatic or violent, but that is unlikely to significantly improve the policy outlook.” Instead, the focus is likely to return to the Federal Reserve and the US economy.

Republicans have made gains in their quest to take control of Congress, but many of the closest races have yet to be called. The final outcome may not be known for days or even weeks if the results are as close as polls suggest and if the losers contest the results.

Optimism for the stock was aided by a history of solid performance following mid-term results. Stocks tend to thrive during times when government is limited and polls show that Republicans can make gains by putting a check on Democratic policies.

Treasuries fell across the curve, with the 10-year yield adding 2 basis points. Government bonds in Europe pared gains.

Chinese developer shares jumped the most in eight months as the regulator extended financial support to the sector, countering weakness in broader indexes in Hong Kong and the mainland.

Cryptocurrencies fell further as a potential takeover by Binance Holdings Ltd. embattled rival FTX.com has highlighted how tensions in the digital asset industry are hitting some of its top players. Bitcoin traded 5.5% lower to trade below $17,700 a piece.

Thursday’s consumer price index data could be the next risk event for the Federal Reserve’s interest rate and comes as core consumer prices rose more than forecast to a 40-year high in September. Even if prices start to slow, the CPI is well above the central bank’s comfort zone.

“The market will still be fixated on inflation remaining high and sticky for at least the next few quarters,” Luke Bars, global head of core client portfolio management at Goldman Sachs Asset Management, told Bloomberg Television. .

Key events this week:

  • EIA oil inventory report Wednesday

  • US Wholesale Stocks MBA Mortgage Applications Wednesday

  • Fed officials John Williams, Tom Barkin speak at events, Wednesday

  • US CPI, US Initial Jobless Claims, Thursday

  • Fed Reps Lori Logan, Esther George, Loretta Mester speak at events, Thursday

  • American University of Michigan Consumer Attitudes, Friday

Some of the major moves in the markets:

Stock up

  • The Stoxx Europe 600 was down 0.7 percent as of 9:52 a.m. London time

  • S&P 500 futures fell 0.4%

  • Nasdaq 100 futures fell 0.3%

  • Dow Jones Industrial Average futures fell 0.4%

  • The MSCI Asia Pacific index was little changed

  • MSCI Emerging Markets rose 0.4%

Currencies

  • The Bloomberg Dollar Spot index was little changed

  • The euro fell 0.1 percent to $1.0063

  • The Japanese yen was little changed at 145.70 per dollar

  • The offshore yuan fell 0.2 percent to 7.2478 per dollar

  • The British pound fell 0.6% to $1.1470

Cryptocurrencies

  • Bitcoin fell 5.5% to $17,664.44

  • Ether fell 9.6% to $1,208.05

Bonds

  • The yield on the 10-year note rose two basis points to 4.14%

  • Germany’s 10-year bond yield fell three basis points to 2.25%

  • Britain’s 10-year bond yield rose one basis point to 3.57%

Goods

  • Brent crude fell 0.5% to $94.88 a barrel

  • Spot gold fell 0.1% to $1,710.08 an ounce

–With help from Vildana Hajric and Muyao Shen.

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