As the US election nears market bets are up to 67% odds in Trump's favour, meaning preparations for looser financial regulations are well underway. US markets gained on this news while European stocks fell over fears a Trump administration will not prioritise foreign policy. In Australasia, NZ and Asia lagged but Australia saw positive returns particularly driven by the natural resources sector.
US markets gained as investor confidence in a Trump oval office and subsequently likely looser financial regulations improved following Saturday’s failed assassination attempt. Investors are also hopeful a further rate cut is in on the way as inflation data continues to speak to its need. The Dow added +0.8%, the NASDAQ +0.6% and the S&P 500 was up +0.5%. Goldman Sachs added +2.4% after its second quarter profits smashed analyst expectations. Macys Inc slid -12.3% after the company’s senior leadership team scrapped all conversations with Brigade Capital and Arkhouse Management regarding a buyout. In rates markets, the US 2-year treasury bond yield fell -1 bp to 4.511% whilst its 10-year counterpart added +4 bps to 4.228%.
Europe’s Stoxx 600 and London’s FTSE 100 fell -1.0% and -0.9% respectively following poor inflation data out of China, lacklustre European company earnings announcements, and increased fear of a ‘foreign policy-less’ Trump office. Burberry Group fell -16.2% after the fashion giant hinted at a drop in 1H24 earnings. Ocado dipped -10.0% after a major investment bank downgraded its stock rating to ‘underperform’. Official May data now emerging depicts Eurozone industrial production as having dropped for the first time in over four months.
In Asia, Japan’s Nikkei 225 and Hong Kong’s Hang Seng saw a poor day of trading after dropping -2.5% and -1.5%, respectively. China’s Shanghai Composite and CSI 300 and Korea’s KOSPI index all added a mere +0.1%. The ASX 200 added +0.7% fuelled by underlying hopes of a pending US Fed rate cut. BHP Group rose +0.6% after reaching an agreement with joint partner, Vale, to each pay 50% of court enforced compensation mandates emerging from 2015 Fundao dam failure. Woodside Energy added +1.3% after an investment bank trimmed its target price for the oil and gas producer. Among the large gains, James Hardie added +2.5% in a strong day of trading. Aussie Broadband dropped -14.0% after it announced an -8% drop in FY25 earnings. In New Zealand, the NZX 50 fell -0.1% as Mainfreight (3.6%) cooled its heels.
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