Global Markets Dip Amid Election Uncertainty
Global stock markets faced a decline on Thursday, October 26, 2023, as investors grappled with the uncertainty surrounding the upcoming U.S. presidential election next Tuesday.
European markets opened lower, with France's CAC 40 slipping 0.7%, Germany's DAX falling 1.1%, and Britain's FTSE 100 declining 0.6%. U.S. futures also pointed towards a lower opening, with Dow futures down 0.5% and S&P 500 futures slipping nearly 0.8%.
Asian markets also saw a mixed performance. Japan's Nikkei 225 dipped 0.5%, while Australia's S&P/ASX 200 slipped 0.3%. Hong Kong's Hang Seng lost 0.1%, while the Shanghai Composite added 0.4%.
South Korea's Kospi, however, dropped 1.5% after North Korea's test launch of a new intercontinental ballistic missile. This move was likely intended to grab America's attention ahead of Election Day.
Adding to the cautious mood was the Bank of Japan's decision to keep its benchmark rate unchanged at 0.25%. Japan is also facing political uncertainty after its governing party lost its majority in the lower house of parliament in elections last weekend.
Upcoming earnings releases in Asia and the rest of the world further contributed to the wait-and-see sentiment.
In the U.S., a report on Wednesday suggested that employers outside the government accelerated their hiring in October, exceeding economists' forecasts of a slowdown. This could raise optimism for Friday's more comprehensive jobs report from the U.S. government.
The report also highlighted the delicate balancing act the Federal Reserve faces. While a slowing economy is expected after the Fed's aggressive interest rate hikes to combat inflation, the central bank must now navigate the risk of recession by potentially cutting rates to maintain job market strength.
Traders largely anticipate the Fed to cut its federal funds rate by a quarter of a percentage point at its next meeting next week, according to data from CME Group.
In energy markets, benchmark U.S. crude rose 18 cents to $68.79 a barrel, while Brent crude, the international standard, added 15 cents to $72.70 a barrel.
The U.S. dollar slipped to 152.14 Japanese yen from 153.31 yen, while the euro cost $1.0855, down from $1.0858.