KEY POINTS
- Global stock markets rose ahead of the US election and Federal Reserve’s interest rate decision.
- Oil prices surged after OPEC+ extended supply cuts until the end of November.
- Investors are closely watching the US election and potential impacts on fiscal policy and China relations.
Global stock markets climbed on Monday as investors braced for a pivotal week ahead of the US presidential election, a Federal Reserve interest rate decision, and anticipated stimulus measures from China. European and Asian markets followed a positive lead from Wall Street, with major indices in Paris, Frankfurt, and Hong Kong all posting gains. Meanwhile, the US dollar slid against major currencies as political uncertainty loomed.
“Traders are gearing up for perhaps the most important week of the year,” said Joshua Mahony, chief market analyst at Scope Markets. The race between Democratic Vice President Kamala Harris and her Republican opponent Donald Trump remains tight, with investors searching for signs of which candidate might gain the upper hand. A victory for Trump is seen as beneficial for the US dollar and bond yields due to his pro-business policies, such as tax cuts and import tariffs.
Oil prices rally after OPEC+ extends supply cuts
The Punch reported that, oil prices jumped more than 2% after several members of the OPEC+ group announced they would extend supply cuts until the end of November. The cuts were initially delayed due to concerns about slowing demand in major economies like China and the United States. Brent crude climbed 2.3% to $74.80 per barrel, while West Texas Intermediate rose 2.5% to $71.20.
Further supporting oil prices was a weekend warning from Iran’s supreme leader, Ayatollah Ali Khamenei, of retaliation against Israeli attacks. Escalating geopolitical tensions added to market uncertainty, helping to lift oil prices higher.
Federal Reserve and China stimulus measures weigh on investor sentiment
This week’s Federal Reserve meeting is expected to result in a 25-basis-point interest rate cut following a substantial 50-point reduction during the last meeting. The outcome of the election could influence future monetary policy decisions, particularly as both presidential candidates have taken tough stances on China. Additionally, China is expected to announce a significant stimulus package this week, which could have broad implications for global markets.
Economists anticipate Chinese lawmakers will approve around one trillion yuan ($140 billion) to support local governments and boost the economy. “We believe the US election results will have some impact on the size of Beijing’s stimulus package,” said Ting Lu, chief China economist at Nomura.
Meanwhile, the Bank of England is expected to lower its interest rates on Thursday following a decline in inflation.
By 1100 GMT, major indices posted gains, with London’s FTSE 100 up 0.6%, Paris’ CAC 40 up 0.4%, and Frankfurt’s DAX up 0.1%.
