October 28, 2024
The financial landscape continues to shift as traditional correlations between stocks, bonds, currencies, and commodities break down, leaving even seasoned investors puzzled. This volatility, compounded by U.S. election uncertainties and tensions in the Middle East, saw global stocks slipping by week’s end while oil prices surged, adding to investor anxiety.
U.S. Markets Mixed on Election Tensions
As the November 5 election nears, Republican former President Donald Trump and Democratic Vice President Kamala Harris are running neck-and-neck in swing states. The prospect of a contested election outcome has led to market jitters, raising concerns over potential turmoil in global markets and broader geopolitical implications.
On Friday, the benchmark S&P 500 declined 0.03% to 5,808.12, ending the week nearly 1% lower. Losses in utilities and financials were partially offset by gains in technology and communication services, helping the Nasdaq Composite finish the week up 0.56% to 18,518.61. Meanwhile, the Dow Jones Industrial Average dropped by 0.61% to close at 42,114.40, reflecting investor caution as rates and political uncertainties loom.
Global Markets Feel the Heat
European markets mirrored U.S. concerns, with the Europe-wide STOXX 600 index closing down 0.03%, ending 1.2% lower for the week. In Asia, MSCI’s broad index of Asia-Pacific shares (excluding Japan) closed down 0.02% but experienced a near-2% weekly drop.
Oil Prices Surge Amid Middle East Concerns
Oil prices spiked due to heightened tensions in the Middle East. Brent crude futures rose 2.25% to $76.05 a barrel, while U.S. West Texas Intermediate crude increased by 2.27% to $71.78, with both benchmarks logging approximately 4% weekly gains.
Treasury Yields Edge Higher as Fed’s Rate Decision Looms
Treasury yields moved up slightly, with the benchmark 10-year yield climbing 3.8 basis points to 4.24%. Investors await next week’s employment data for insight into the Federal Reserve’s next rate decision. According to CME Group’s FedWatch Tool, traders are pricing in a near 95% likelihood of a 25-basis-point cut at the Fed’s November meeting, reflecting mounting expectations of monetary easing.
Dollar Strengthens Against Yen and Swiss Franc
The dollar advanced, marking its fourth consecutive weekly gain against the yen. It strengthened 0.26% against the yen to 152.22 and rose 0.08% against the Swiss franc to 0.866. The euro slipped 0.29% to $1.0796, while the British pound weakened 0.08% to $1.2961. The dollar index, which gauges the greenback’s strength against a basket of major currencies, rose 0.24% to 104.30.
Gold Remains Resilient Amid Rising Rates
Gold saw choppy trading but ultimately closed higher, reflecting investor appetite for safe-haven assets. Spot gold increased by 0.28% to $2,743.31 per ounce, while U.S. gold futures gained 0.2%, closing at $2,754.60 per ounce, just shy of the record $2,758.37 set earlier in the week.
Commentary: Political Impact on Market Sentiment
“Historically, volatility spikes in October during election years,” said Keith Lerner, co-chief investment officer at Truist Advisory Services, noting that the current market uncertainty may persist until the election outcome is clear.
Tom Plumb, CEO of Plumb Funds, added, “In the short run, political developments are heavily influencing markets, with a perception that Trump may be more favorable for the market than Harris.”
As the countdown to the election continues, investors are closely monitoring both economic data and geopolitical developments, poised for what may be a defining moment for global markets in 2024.
