Nerves showing in Europe as US elections go down to the wire
Fiona Cincotta November 4, 2020 7:21 AM
Europe points to a weaker open as US elections see no clear winner yet. Services PMIs up next.
Europe is set to open to lower as caution dominates amid no clear outcome in the US elections so far. The elections are going down to the wire and that is unnerving investors.
Perhaps the key takeaway so far as that Trump has performed much better than the polls expected, whilst Joe Bidden has not quite made the progress that the polls guided for. It certainly wouldn’t be the first time that polls have underestimated Trump.
Congress is also going down to the wire with the Democrats not flipping as many seats as the polls had indicated in the Senate. This is key, because even if Joe Bidden wins but fails to flip the Senate then more fiscal stimulus deadlock could be expected which is unfavourable for both risk sentiment and stocks.
Services PMI data in focus
The markets will remain fixed on the results of each state as they come in, however attention will also be turning towards the service sector PMI data. The service sector across the board has been more deeply impacted by the pandemic, with a more fragile recovery. In the UK that recovery has been showing signs of losing momentum as covid cases started rising again. The UK service sector PMI is expected to confirm October’s flash reading of 52.3.
The Eurozone, which saw the second wave of covid start earlier particularly in tourist destinations such as France and Spain, is expected to report a deeper contraction in the sector that in September, with the PMI expected to fall to 46.2. The level 50 separates expansion from contraction.
With the UK, France and Germany heading back into lockdown, these figures are going to significantly deteriorate next month.
US ADP & ISM non manufacturing data
Looking ahead US ADP employment numbers will be in focus ahead of Friday’s non-farm payroll. Expectations are for 650K private sector jobs to have been created in October, down slightly from last months 750k. US ISM non-manufacturing will also provide some clues into the health of the US economy.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.