LONDON (Reuters) – European stock markets opened early on Tuesday as investors bet on a clear victory for Joe Biden as the United States votes in its most polarized presidential election in living memory.
The stable income of French bank BNP Paribas boosted its shares by 6.5%, in the sense that the banking sector was financially strong from the COVID-19 crisis.
But a 40% drop in full-year earnings at Associated British Foods led to profits in its Primark clothing business, a reminder of how the epidemic is wreaking havoc with the corporate balance sheet. Shares of ABF fell 1.7%.
US President Donald Trump and Democratic rival Biden on Monday pushed a last-ditch vote in battleground states as their campaigns prepared for post-election legal disputes that could have delayed the apparent result.
“Markets are pricing for a Biden win, definitely a clear result, and they want a clear and uncontested result,” said CMC Market Chief Market Analyst Michael Hewson.
He said a blowout Trump victory, an outcome, or simply a split result could trigger an improvement in markets.
Alvin Tan, Asia Forex Strategist at RBC Capital Markets, said, “Control over the Senate is critical to any ‘blue wave’ scenario, otherwise a divided government persists and expectations of fiscal stimulus must be raised back.”
The pan-European STOXX 600 index rose 1.3% on the second day of strong gains, hitting a five-month low last week. Growth-sensitive cyclical sectors such as oil and gas, miners and banks have once again led the medical sector – all growing over 2%. No big European economic data is going to happen on Tuesday, only to earn investors. Is a smattering of earnings. BNP Bank was buoyed by a surge in currency and commodity trading to beat third-quarter profit expectations.
Binary market agreement
Analysts said it was even more tame on Tuesday when the mood was more upbeat, as European countries introduced tougher lockdown restrictions to fight an epidemic that was set to affect the economy more.
The Australian central bank became the latest to take action to shore up the coronovirus-hit economy, trimming interest rates near zero on Tuesday and completing its bond-buying plans.
Investors are also awaiting meetings of the Federal Reserve and Bank of England this week, which is expected to gain more support.
“The problem with markets is that they are very binary. One day everything is hunky dory and the next day it is a depth of despair and so you have to walk that test between the two, creating instability, ”said Husson of CMC Markets.
US manufacturing activity grew faster than expected in October and the global tone was supported overnight on Wall Street, initiated by US equity markets and US futures rallying.
The dollar and gold had changed a bit as currency and bullion traders bunked ahead of the US election.
MSCI had added 1.4% overnight to the most comprehensive index of Asia-Pacific shares outside Japan. The 2-1 / 2 year high gauge in mid-October, driven by a 37% rebound from mid-March, is under 1% and over 5% this year.
Strategists at the Blackrock Investment Institute said the election was more likely to lead to a Democratic sweep.
Strategists said in a report, “We are starting to cover topics that we believe will perform better in the event that overall higher risk risks, despite last week’s market fluctuations Heading towards. “
South Korea’s leading index opened 1.7% and Hong Kong’s index rose 2.2%.
The MSCI China Index reached a 23-year high after the fastest expansion in a decade of Chinese factory activity.
Japanese markets were closed for the holiday.
The US dollar went below a one-month high. Against a basket of currencies held at 93.996. The safe-harbor yen was steady at 104.72 yen per dollar.[FRX/]
Australian [AUD=D3] Fell 0.2% and Australia’s ASX 200 ended 2% higher as the central bank trimmed interest rates to near zero and expanded its bond-buying program, as expected.
Oil prices rose after a two-week weakness, with Brent futures down 0.2% to close at $ 38.89 a barrel, but hanging on with most bounce overnight. [O/R]
Gold fell 0.1% to $ 1,892.5 an ounce, while the dollar index closed at 94.027.
Editing by Nick Jones, Reporting by Hugh Jones