US Tech Stocks Rebound Ahead of Mid-Term Election Results – Nasdaq Gains 0.83%
US equity markets finished a mixed trading session yesterday as investors positioned themselves ahead of the US mid-term election results, with technology stocks recovering some of their recent losses. The Nasdaq led the gains, climbing 0.83% to close at 25,372, while the broader S&P 500 advanced 0.36% to finish at 7,568. The Dow Jones moved in the opposite direction, declining 0.38% to close at 51,786. The moves represented something of a reversal of the previous session’s performance, with technology stocks attracting renewed buying interest despite continued uncertainty surrounding the political outlook in Washington.
US Treasury yields moved higher across the curve following stronger-than-expected JOLTS employment data. The policy-sensitive 2-year Treasury yield rose 3.7 basis points to close at 4.631%, while the benchmark 10-year yield climbed 5.0 basis points to finish at 4.962%, moving back towards the psychologically important 5% level. The US dollar also strengthened modestly against the major currencies, with the Dollar Index gaining 0.07% to close at 101.87.
Oil markets experienced a relatively subdued trading session following the sharp declines earlier in the week, as investors awaited further developments surrounding potential peace negotiations in the Middle East. Brent crude slipped 0.31% to close at $104.45 per barrel, while WTI crude edged 0.36% higher to finish at $96.81 per barrel. Both benchmarks remained close to four-week lows as traders continued to assess the likelihood of a diplomatic breakthrough and the potential implications for regional oil supplies.
Gold prices also came under renewed selling pressure as the stronger US dollar and rising Treasury yields weighed on demand for the precious metal. Gold declined 0.62% to close at $3,923.22 per ounce, moving back towards important technical support levels following its recent recovery.
Dollar in Focus as Geopolitics and Fundamentals Go Head-to-Head
With the US election results unfolding alongside several important economic releases, FX traders are preparing for a volatile few days ahead. Political developments are likely to dictate broader market sentiment in the next few sessions, while incoming economic data, especially key Non-Farms numbers on Friday, and any fresh headlines from the Middle East could provide additional direction for currencies in the coming days.
The dollar will be in sharp focus throughout this week, with so much attention focused on US markets. It is still sitting at vulnerable levels against several currencies and commodities, and the risk seems to lie with a jump higher into fresh ranges.
The greenback is sitting near annual highs against the euro, kiwi, Aussie, gold and silver, and updates this week could see it break higher. The mid-terms will be the first hurdle today, but if we see stronger jobs numbers—as we did last week from JOLTS job openings—as the week progresses, fundamentals could jump ahead of any geopolitical considerations to push Fed rate hike expectations, and the dollar, much higher.
Markets to Remain Volatile Today
Looking ahead, the US mid-term election results will dominate market attention today, with investors closely monitoring the potential implications for fiscal policy, government spending and the broader economic outlook. Any significant change in the balance of power in Congress could influence expectations for future US policy and generate increased volatility across markets.
The economic calendar also contains several important releases, with New Zealand employment figures already having come out weaker than expected at the start of the Asian session today. European inflation will come into focus later in the day, with the Eurozone CPI flash estimate (exp. +4.0% y/y, core +2.5% y/y). Attention will then shift to the US session, where ISM Services PMI data (exp. 54.8) is due early in the day, followed by US crude oil inventory figures (exp. -0.1 million barrels).
Explore all upcoming market events in the Economic Calendar.
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