Markets Hold Steady with Eyes on the U.S. Elections and Economic Updates
Markets remained steady and calm this past week as they await the outcome of the U.S. elections.
U.S. Market Conditions
In the U.S., stocks generally rose, with the Nasdaq leading due to strong performance in large tech stocks. Meanwhile, bond yields continued to climb, with the 10-year Treasury yield reaching 4.29%—its highest in months. This rise reflects expectations that the Fed may need to keep rates elevated as the economy remains strong. Concerns about a recession eased somewhat due to expected Q3 GDP growth of nearly 3%, the highest consumer confidence since January, and only a small drop in job openings. The tight labour market is likely to keep the Fed cautious about inflation.
Q3 Earnings Season
The U.S. earnings season picked up speed, with tech giants taking centre stage due to their major impact on index performance. Tesla reported record margins, raising hopes for resilience in the tech sector, while Alphabet’s strong results led to a modest stock gain, though investors still question its AI strategy. With nearly half of the S&P 500’s value reporting results this week—Apple, Amazon, Meta, and Microsoft among them—earnings are set to influence market sentiment in the short term, as investors focus on whether companies can stay profitable despite rising costs and slowing demand.
Currency Markets
In currency markets, the U.S. dollar stayed near multi-decade highs. The Japanese yen saw fluctuations around the general election, where the ruling party lost its majority, creating uncertainty around the Bank of Japan’s future policies. Despite this, Japan’s stock market ended the week strong, outperforming other markets.
Commodities
Commodity markets pulled back, with oil prices dropping over 5% early in the week as tensions eased between Iran and Israel.
Next Week
Looking ahead, key economic updates include the Federal Reserve's policy meeting, the U.S. jobs report, global PMI readings, and inflation data from Australia and the Eurozone. With the U.S. midterm election approaching, political focus is likely to dominate, though volatility could increase—the VIX index, which measures expected market swings, has been rising quietly in the background.
