Oil prices plunge, but US voters remain pessimistic

Voters view soured by inflation despite positive data

As they head to the ballot box today, US voters are likely to remain focussed on still high inflation as energy prices have surged since the outbreak of the US-led war with Iran and wages are failing to keep up, creating the “affordabilitly crisis”. This is despite data last week showing the US economy grew at a 3.4% annualised pace in Q3, its strongest performance this year.

Even more positive data coming through on Monday is unlikely to make a difference. US manufacturing activity picked up again in October, with the S&P Global Manufacturing PMI coming at 54.9, the 15th month of solid growth. However, new order growth slowed and rising costs from energy and supply-chain disruptions weighed on margins. The Institute for Supply Management’s manufacturing index also rose again, rising one point to 55.5 in October, the second-highest reading in more than four years. In a sign of a still resilient labour market, factory headcount increased in October for a fourth month.

Equities

Technology stocks led equities lower on Monday, with the Philadelphia Stock Exchange Semiconductor Index falling 3.4%, adding to Friday’s 7.2% drop. AI-related stocks continued to falter after an amended IPO filing showed Anthropic's net loss fell sharply in Q3, while revenue jumped. Chipmaker Marvell Technology plunged 13% after it said it was buying optical components maker Lumentum in a $115 billion all-stock deal, including debt. Lumentum dropped 18.6%.

• S&P 500 7,541.40 -0.51%
• Nasdaq Composite 25,164.32 -1.07%
• Dow Jones Industrial 51,993.98 +0.41%
• DAX 25,981.09 +0.63%
• CAC 40 8,047.69 +0.98%
• FTSE 100 10,761.33 +0.29%

Currencies

The US dollar fell on Monday on falling oil prices, a drop in Treasury yields and investor positioning ahead of today’s US midterm elections and this week’s labour market reports.

Cryptocurrencies continued to suffer, with Binance's customers withdrawing about $4.72 billion from the cryptocurrency exchange after hackers stole around $6.3 billion of crypto last week.

• DXY 101.78 -0.19%
• EUR/USD $1.1187 +0.24%
• GBP/USD $1.3406 +0.13%
• USD/JPY ¥157.87 -0.23%
• Bitcoin $76,623.00 -1.50%
• Ethereum $2,253.88 -0.41%

Fixed Income

Global bond yields moved lower as oil prices dropped on the hopes of new US - Iran peace talks. The US Treasury said it expects to borrow $618 billion in Q4, $10 bn less than it projected in August, due to a higher-than-assumed starting cash balance that is partially offset by lower projected net cash flows.

• US Treasury 10-year -0.3 bps 4.905%
• German Bund 10-year -3.2 bps 3.306%
• UK Gilt 10-year -9.7 bps 5.191%
• France OAT 10-year -8.7 bps 4.898%
• Italy 10-year -10.6 bps 4.404%

Commodities

Gold rose on Monday, rebounding from Friday’s one-year low, on lower oil prices tempering inflation expectations and as investors positioned themselves for the US midterms.

Oil prices dropped on hopes of resumed talks between the US and Iranian President Masoud Pezeshkian said Supreme Leader Ayatollah Mojtaba Khamenei had granted the government certain authorities for peace talks.

• Spot Gold $3,954.41/troy oz +2.1%
• Spot Silver $50.64/oz +3.1%
• WTI crude $96.46 -7.36%
• Brent crude $104.77 -7.63%

Corporate Earnings Today

Companies reporting on Tuesday, 3rd November:

Key data to move markets today

All eyes will be on the US midterms today. Markets will also look to the US JOLTS numbers for signs of labour market strength.

• Speeches by German Bundesbank President Joachim Nagel and Dutch Central Bank Governor Olaf Sleijpen
• Factory Orders and JOLTS Job Openings