Wall Street tumbles after opening green

Swissquote Bank Research Team Swissquote Bank Ltd

US equities extended last week losses and fell to the lowest level since October 8, as investors are worried that Republicans and Democrats wouldn’t reach an agreement on the next stimulus package ahead of the deadline set for Tuesday. Wall Street started the session with much confidence but made a u-turn later in the session.

On Sunday, House Speaker Nancy Pelosi said that the deadline for agreeing on a stimulus deal that would be possible before the election was Tuesday. Pelosi and Treasury Secretary Steve Mnuchin narrowed their differences in discussions yesterday, with the Democrat official expressing hopes that by the end of Tuesday it will become clear whether another stimulus package would be launched before the election scheduled for November 3. Still, investors are worried that the two sides would fail to reach an agreement.

The S&P 500 fell 1.63%, and Nasdaq tumbled 1.65%. Elsewhere, the Dow dropped by 1.44%.

Besides the stimulus pessimism, investors are concerned about the increasing number of COVID infections in the US.

All of the S&P’s 11 major sectors closed lower. Energy, which fell 2%, was the worst performer. The benchmark index was also dragged down by tech stocks like Apple, Amazon, and Microsoft, which fell over 2%.

In individual corporate news, ConocoPhillips agreed to acquire US shale oil producer Concho Resources for $9.7 billion. The share price of Conoco fell over 3% after the announcement. The energy sector consolidates further amid lower fuel prices and weakening demand caused by the pandemic.

IBM fell about 1% in after-hours trading following its quarterly report. The Q3 results were in line with analysts’ expectations, but the company failed to reinstate guidance.

Halliburton, the world’s second-largest oil field service provider, reported its fourth consecutive quarterly loss, though analysts anticipated even worse figures. Still, the share price fell over 0.60%.

Goldman Sachs agreed to pay $2 billion to settle the charges of the US Department of Justice, which accused the banking giant for its role in Malaysia's 1MDB scandal.

Most of the Asian markets are bouncing back following the Wall Street-induced bearishness amid stimulus talks and growing political uncertainty. Investors are worried that President Donald Trump would contest the election results in the case he loses.

At the time of writing, China’s Shanghai Composite is up 0.14% after opening lower, and the Shenzhen Component has added 0.58%.

China’s Ant Group, the fintech subsidiary of e-commerce behemoth Alibaba, obtained the green-light from the Hong Kong stock exchange to list its shares there amid the $35 billion IPO, which would be the largest one in the world. Ant plans to list both in Hong Kong and on Shanghai’s STAR Market.

Hong Kong’s Hang Seng Index is now down 0.78%.

Japan’s Nikkei 225 is down 0.53%, and South Korea’s KOSPI has bounced back to gain 0.28% for the day.

In Australia, the ASX 200 closed 0.72% lower. The minutes from the Reserve Bank of Australia (RBA)’s October meeting hinted to further monetary easing measures soon.

European stocks will be under pressure on Tuesday amid a general bearishness.

In the commodity market, oil prices continue to decline for a fourth straight session on Tuesday morning, as investors are worried that the second wave of the pandemic is hindering the recovery in fuel demand. Still, the two crude brands are trading sideways on larger timeframes. Both WTI and Brent have declined by about 0.30%.

Gold has also dropped in early trading on Tuesday, as investors are monitoring negotiations between Pelosi and Mnuchin. The metal fell 0.41%, trading near the support level at $1,900.

In FX, the US dollar is in wait-and-see mode. The USD Index shows no direction at 93.410. EUR/USD is up 0.07% to 1.1774.

The pound is trading in tandem with the greenback and is down against the European currency amid the never-ending Brexit talks saga. The British currency is under increased pressure as Wales introduces lockdown measures, while the number of infections continues to accelerate in the UK

Stay on top of the markets with Swissquote’s News & Analysis

Author

Swissquote Bank Research Team

Swissquote Bank Ltd

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.